Argentine companies are excited about improving revenues in 2023, despite falling GDP

Argentina’s GDP would have grown by more than 5% in 2022, but activity would stagnate this year, in a scenario marked by a shortage of foreign currency and high inflation.

Despite the consensus for a slowdown in 2023, 65% of local companies expect their revenues to increase over the next 12 months, marking a four percentage point improvement in expectations compared to the first half of 2022, according to a private poll.

According to a report carried out by Grant Thornton’s International Business Report (IBR), globally, the industries that project the highest growth in profits are Banking (67%), Life Sciences (63%), Financial Services (64%) and Health Care (62%).

When asked by Bloomberg Línea, Grant Thornton confirmed that the increases anticipated by Argentine companies are in real terms. In other words, they foresee improvements in their income in percentages higher than inflation that is projected to be close to 100% this year.

WHAT ABOUT HIRING?

The report pointed out that another positive indicator at the local level is that related to employment, in which 43% of the companies expect to increase the number of collaborators in the next 12 months, which implies a growth of nine percentage points in relation to the first semester of last year.

Regarding the business optimism factor in Argentina, it remained constant at 25% net throughout all of 2022.

“The challenge will be to maintain profit margins, strongly threatened by cost increases. For those multinational companies accustomed to measuring their indicators in hard currency, the uncertainty regarding the evolution of the nominal exchange rate against inflation is added”, said Fernando Fucci, Managing Partner of Grant Thornton Argentina.

THE ADJUSTMENTS OF ARGENTINE COMPANIES IN 2023

On the economic level, linked to the actions that businessmen plan to take to manage rising costs and inflation, 45% highlighted that they are taking steps to improve internal efficiency, costs and reduce spending.

Meanwhile, 40% indicated that they are working on plans to mitigate the risks associated with inflation.

“In a scenario that is expected to be complicated, most companies are inclined to work on improving efficiency by reducing costs and expenses, while a smaller proportion aims to differentiate their products, which would allow them to have better prices and revenue,” said the Grant Thornton executive.

To mitigate the different threats linked to their businesses, companies are taking different actions: 38% are improving relationships with their customers and accelerating investment in technology, and 35% are improving their understanding of their costs and encouraging in equal parts the culture, talent development and leadership.

In turn, 25% said they were considering merger and acquisition opportunities.

With information from Bloomberg

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