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Idea Colloquium: Executives believe the dollar will continue to rise and are concerned about institutions

The IDEA survey of expecttions, which is often a thermometer of business concerns, shows that the economic downturn was greater and more extensive than expected. With sales on the floor, little prospect of growth in exports and little job creation, those interviewed are convinced that the dollar will continue to rise. They also state that “competitiveness is linked to institutional aspects.” The expectations of an improvement in the next semester are on the floor.

In the behavior of the main variables, 80% believe that the dollar will rise in the next six months. This exceeds the expected increase in other variables (such as country risk), which 62% see on the rise. The American ticket will rise more than the rates, according to the participants.

“Expectations are quite adverse and do not show a basis for optimism,” according to Eduardo D’Alessio, in charge of the survey.

89% of those interviewed (executives of companies from different sectors) consider that the last semester was negative. The prospects for the next semester are also negative for 68% of those surveyed.

According to the survey, there will be job destruction in 25% of companies. 17% declare that there will be increases in the workforce, while 42% say that it will decrease.

“We are foreseeing a situation in which we cannot be worse, but there are not very strong expectations about future improvements,” according to D’Alessio, accompanied by Luis Secco, who explained the economic situation.

The period November 2019-April 2020 was positive only for 5%, but 32% expected a rebound in the coming months. The evaluation of the months of May-October was good only for 10% of those interviewed, but those who believe that there will be improvements are only 26%. This panorama is the darkest of the last decade surveyed by D’Alessio / Iorol for IDEA.

Investment as a percentage of turnover will be around 10%, the same low levels as in 2012 (when the second term of Cristina Fernández de Kirchner started) and 2015. “We are in the lowest investment in history. It is one of the central issues. Entrepreneurs see factors that hinder them to make investments, “according to Secco. “They are values ​​typical of moments of crisis. These are the soft investments (training), not so much the hard (new plants). There is a decrease”, according to D’Alessio.

Neither the size of the company (SME or large) shows differences in relation to investment.

In general, the agenda of business concerns is dominated by tax reform and labor reform. Those concerns remain at the top of the agenda, but they begin to lose space in the face of other concerns. This year, concern for the “proper functioning of institutions and justice” captures 43% of the responses. And if it does give something unprecedented: that concern even exceeds the concern about inflation, which is mentioned as a problem by 29% (in the previous measurement it was 50%).

“The feeling is that the rules of the game can change from one moment to the next,” is what a growing number of executives say.

“Guarantee of the protection of private property” is also one of the claims that appears on the rise. “There is very little expectation that a consensus can be built with the public sector. There is skepticism about the public sector’s ability to contribute to the private sector,” Secco points out.

Within the different analysis segments, the drop in sales began to be less than in previous months. Exports will grow 16%, down from the 25% that believed that in the previous survey.

There is an increase in idle capacity by companies, due to a drop in demand for their products. 34% of the companies could not make up for the increase in their prices in the face of inflation (their costs). This is especially noticeable in the service sector.

Teleworking or remote work is already a trend. 29% will telework every day and 60% will do it a few times a week.

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