Fynsa
Resilience is the capacity of a person or community to face and overcome adverse or challenging situations, such as the loss of a loved one, a serious accident, an illness, a natural disaster, a social conflict, among others.such as the loss of a loved one, a serious accident, an illness, a natural disaster, a social conflict, among others. This capacity involves not only physical and emotional endurance and strength, but also the ability to adapt and the ability to recover and learn from difficult experiences, as well as the capacity to find new ways of living and thriving.
When we look at the Imacec for January, which increased 0.4% compared to the same month last year, the market is surprised, since it expected, on average, a negative variation. It is not that the market is obsessed with activity decreasing, or that through its projections it tries to modify the behavior of agents and thus "influence" the result, but it is that when we put in our "black boxes" the different variables that have explained the historical behavior of the economy, we receive unhappy projections. In this specific case, it is not that the colleagues were not so far off (-0.5% YoY); in fact, in December there was more discrepancy, but it was not seen so much because both the estimates and the actual data had the same sign. What is going on, then?
Digging a little deeper, two components stand out and catch our attention: trade and services. While these span a myriad of different sectors and activities, they respond to broadly similar expectations and rationales. Both were greatly helped by family support measures and pension fund withdrawals during the pandemic, although services joined the bandwagon a little later, as a result of the social distancing measures still in place. Thus, once this liquidity began to dry up, the same would be expected to happen to the dynamism of these sectors. This, in fact, did happen. Year-on-year rates of change quickly began to decline, turning negative for commerce and less positive for services. Some specific situations prevented the latter from turning red (such as the normalization of the education sector), but it was only a matter of time before this happened.
However, the situation started to turn around. One measure that we economists like to look at is the variations of the seasonally adjusted series, which is a statistical method used to eliminate effects such as working days, calendar composition, recurring holidays, etc. Thus, even though versus twelve months it continues to be negative, the monthly variation of the commerce sector has shown 5 months of growth, with the most recent data accelerating versus previous months.. All this, with a weakened labor market, falling wages, negative prospects for the economy and inflation that has not yet normalized.
In the case of services, something similar occurs, although the explanations have ranged from education services, to business services, to health and other personal services.to health and other personal services. In other words, the two sectors that should be leading the contraction of the economy are not only not doing so, but are actually contributing positively to the monthly variations.
¿Does this give us enough evidence to expect growth in 2023? Not at the moment. Consumers, households, and businesses have shown significant resilience, which was seen in a fantastic way during the pandemic, but there are certain things that cannot be overlooked, such as the reduced capacity to generate income, the decrease in savings and the uncertainty still in place, which has prevented an upturn in investment projects.
This should imply a drop in activity during the year, although we recognize that it will probably be less than that predicted by private agents, government institutions and even international organizations (as you can see, we are not the only "catastrophists"). For our part, we will probably go from being one of the most optimistic to being in the middle of the table (we project a 1.0% drop), but we cannot rule out that, under certain conditions that are more positive than the resilience we are seeing today, GDP will not show a drop (but also no growth) during 2023.
