That's how much the economy will fall this year, according to a major city consulting firm

Economic activity will decrease 4.3% By 2024, a contraction could lead to GDP below 2010 levels, a report says. Capital Trust. “Primary sector indicators have already declined in the first two months of the new administration. An inflationary shock indicating a sharp drop in purchasing power, strong fiscal adjustments made by the authorities and a lack of a clear horizon for investment are affecting the forward dynamics,” the consultancy pointed out.

In this regard, several indicators of economic activity have already shown negative records in the first two months of the new administration. Both the leading activity index (Universidad de Della) and the industrial production index already showed a significant decline in December (-6.7% and -12.8% year-on-year).

In addition, the outlook for entrepreneurs remains negative in the first quarter of the year. In fact, 50% estimate that domestic demand will decrease (expect. 13% expect an increase) and a similar proportion predict a decrease in the utilization of installed capacity (49.4% vs. 22% expect an increase) . In this sense, according to ADEFA, vehicle production shrank by 16.7% year-on-year in January.

For their part, construction indicators already showed negative figures last year, although the dynamic has deepened since December: synthetic indicator of construction activity Intech It fell 12.2% in the month, compared with a 2.3% decline accumulated through November.

Likewise, in January, the Constructoya index, which reflects private sector demand for goods, showed a 29.2% year-on-year decline and cement exports to the domestic market fell 20% year-on-year.

Meanwhile, sales at retail stores surveyed by CAME shrank 28.4% year-on-year last month, strongly accelerating its rate of decline (-13.7% in December and -2.9% year-on-year in November).

“Within the framework of strong inflationary acceleration conditioned on the purchasing power of wages, consumption also began to take its toll. Broadly, mass consumption of Scentia marked a slowdown compared to previous months (+1.4% year-on-year in December, +7.7% year-on-year in November and +8% year-on-year in October”).” Fundación Capital said.

According to the consultant, moving forward, Private consumption will show a significant fall in the year (-7.4% year-on-year.), contributing five percentage points to the fall in GDP, In the structure of purchasing power which deteriorated greatly after the inflationary shock.

“Actually, Real earnings of private sector workers were at their lowest level in December since May 2003. And prospects for the future point to only moderate levels of watershed without recovery of lost ground,” the report explained.

“In this way, clear signs of contraction in economic activity are already evident. In this frame, We forecast a 5.8% year-over-year decline in GDP in the first quarter, a 10-point drop in private consumption and a 20-point drop in investment.In line with what was seen in the post-demonetisation quarters of 2018. A rebound in exports (15% year-on-year) and a fall in imports (-14% year-on-year) partially offset this movement,” the Fundación Capital report notes.

He added, “Even if the external sector contributes positively after agriculture recovers from the severe drought in 2023, the climate will need to be closely monitored, which could mean a loss in yield from a rough harvest. In the same sense, export performance may be strained due to dizzying exchange rate delays and/or gap widening. Therefore, economic activity is likely to be at its lowest level since 2010 (except for 2020).