RIO DE JANEIRO, BRAZIL – Business people feel apathy towards Argentina. With the coronavirus pandemic still overshadowing business, coupled with a year of electoral uncertainty, high inflation and price controls, executives believe that the country’s economy has been worsening in recent times. And what is worse: it will continue to fall in 2022.
According to the Business Confidence Index, prepared by Vistage Argentina, 50% of the businessmen consider that the economy worsened compared to a year ago, even taking into account that the country was still in the middle of the pandemic. A 29% indicated that the economy improved and the remaining 21% responded that it remained the same.
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The outlook for the future is not improving either. Business pessimism continues into 2022, with 49% expecting the situation to deteriorate in the next 12 months. The number of optimists is 23%, while 28% believe that the scenario will remain more of the same.
The data arises from a survey of 368 businessmen, “number one” CEOs, top executives and owners of large companies in Argentina, in which they were asked about the behavior of the economy, the profitability of their companies, sales levels, investment in fixed assets, the number of employees they expect to have next year and the main problems they are facing. This survey, which has been conducted since 2006, pertains to the July-September 2021 period.
“As we have been observing throughout this year, companies reflect that the economic uncertainty – first generated by the pandemic and, in recent months, by the climate of political polarization due to the legislative elections – is being replicated within the organizations both at present and in their future plans. Nevertheless, businessmen still believe in the country and most of them estimate that investment will increase in the next 12 months. This is a noteworthy fact,” said Guadalupe San Martín, CEO of Vistage Argentina.
Looking ahead to next year, inflationary dynamics will continue to increase and not even the price controls and freezes imposed by the national government will be able to prevent an increase in the prices of products and services. For 76% of those surveyed, it is inevitable that the goods they sell will increase. Moreover, businessmen estimate that inflation will end 2021 at 53% (up to October, the generalized increase in prices accumulated 41.8%).
The bad news also comes from the point of view of profitability, since 34% of businessmen believe that their company will be less profitable and 42% that it will remain the same. However, when asked about the volume of units sold that they expect to sell in the coming year, 50% believe that it will increase and only 16% that it will decrease. The same goes for turnover: 63% expect it to increase.
The biggest problems facing companies today? First, economic uncertainty. Forty-two percent of executives are concerned about the economy of Argentina, the world and public finances.
In addition, companies are having problems related to personnel (21%), either to find, hire, retain or train their workers. On this point, the good news: in the next 12 months 40% of the companies will increase their workforce and only 8% will be forced to reduce it.
Other business concerns highlighted were higher energy, raw material and salary costs (15%); company financial issues, such as financing, cash flow and profitability (10%); and that their growth is too slow or too fast (8%).