Month after month consumers seem to be buying less in Argentina. For twelve consecutive months consumption in the country has picked off one percentage point after another. December 2016 ended with a 3.3 percentage drop compared to the same month the previous year.
The Monthly Consumption Indicator (IMC) prepared by the Work and Economy Institution (ITE) of the Germán Abdala Foundation closed 2016 with a fall of 3.3 percent annually, making it the lowest it has been since 2010.
This consumption blow has been caused by: the impact of inflation overpowering the ability to make purchases with stagnant salaries, the destruction of job openings, the transformation of the State’s role and the adjustment of public spending.
Yet with private investments coming in, the internal market has felt some relief during the first year of the Government. This small, but satisfying achievement, has been propelled by the recuperation of retail sales and durable goods, registering December with a 4 percent improvement compared to the previous month.
All this economic activity occurring during a year leading up to midterms has led various government sectors to say progress will continue with a lowering of inflation, the creation of jobs and the restart of public works investment.
Private consumption is a huge deal. It is one of the three factors that determine a country’s Gross Domestic Product (GDP), which accounts for the total value of goods produced and services provided in a country during a period of time.
Salaries with viable buying power and stable levels of employment remain key components of a successful economy. Let’s hope the Government can deliver on some of the promises it is making leading up to the midterm elections.