The Covid-19 pandemic has caused the prices of most products to increase around the world. One wonders if this inflation will spoil the end-of-year celebrations when the fear of an epidemic recovery is just as worrying, especially in Europe.
Spain smashed its inflation record again
In Spain, inflation reached the highest level for 29 years, ie 5.6% over one year. This is a subject that has been talked about a lot for months in the country. It deeply worries the Spaniards because the cost of living is increasingly high and affects most products. In addition to energy prices which have risen sharply in recent months, + 62.8% for example for electricity in October alone, there are many other products that are concerned, such as food products or liquid fuels. The Spaniards see their purchasing power reduced, they should buy less. In any case, this is the fear of traders who fear that Christmas sales for the year 2021 will be down.
This Christmas was to be marked under the sign of economic recovery, but ultimately inflation risks completely changing the situation. We must add the difficulties of supply. Firstly, the shortage of microprocessors which particularly affects the automotive industry in Spain. In October, for example, the production of vehicles fell by 38% according to Anfac, the employers of the automotive sector. And this is a situation that could also continue throughout the next year. However, this paralysis of the automotive industry is very worrying for the Spanish economy since this sector represents 10% of its GDP and 18% of exports. There are already thousands of employees in the sector affected by this situation and who have been placed on short-time work.
The Covid-19 epidemic also risks spoiling the end of the year holidays. To save them and to prevent a 6th wave of Covid-19 from spreading in Spain, more and more regions are calling on the population to be cautious. They have also started to adopt more restrictive measures in the face of the increase in cases because the incidence has almost doubled in one month in Spain, even if it remains more spared compared to other European countries, thanks to a high rate of vaccination, since nearly 90% of the population is fully vaccinated. To thwart the advance of this 6th wave, a large part of regions such as Galicia, the Basque Country, the Balearics, the region of Valencia or Catalonia have decided to require the health pass, which did not yet exist in Spain. . Madrid, in particular, refuses to put it in place, as well as to adopt any other restrictive measure before the Christmas holidays. At least for now…
In Argentina, inflation still strong
Another country used to rising prices is Argentina where we live with 50% inflation per year. This inflation and the debt to the International Monetary Fund (IMF) are slowing the South American country in its post-pandemic economic recovery. Because life has gradually normalized and the Covid-19 seems far away, but the threat of the South African variant worries.
With the return of sunny days and the vaccination campaign, the Covid-19 in Argentina is on the decline. Monday, December 6, 2,500 cases and 34 deaths were recorded, out of 44 million inhabitants. In 2020, on the same day, there were double the cases but four times as many deaths. Mass vaccination therefore seems to be having an effect in this country where two out of three inhabitants have received both doses. If the Delta variant has been relatively well controlled, the Omicron variant detected in South Africa which seems more aggressive worries. The first case was also confirmed on Monday. A 38-year-old Argentinian who returned from a professional trip to South Africa is placed in quarantine, as well as the contact cases, but we are still afraid of returning to total isolation after the trauma of the eight-month confinement in 2020 which did not really slow down the contagion and which in addition deepened the economic crisis.
Despite a slight economic improvement, some figures are still in the red. This is the case with inflation, a permanent evil in Argentina that governments cannot get rid of. For one more year, it stands at 51% and the projection is not encouraging since we expect monthly inflation of 3.7% over the next six months. This is in addition to an unemployment rate of 9.7% and a poverty rate of over 40% in the first half of this year. To this rather difficult panorama, we must add the headache of debt negotiations with the IMF. Recall that in 2018, then President Mauricio Macri requested a record loan of $ 57 billion, of which 44 were paid. For the government, these 44 billion are a big stone in its shoe. Because given the economic situation, it is impossible to repay this loan without plunging the country into crisis. This is why the teams from the Ministry of the Economy are currently in Washington in order to reach an agreement. The goal is to pay back but much less and later. This is the objective of the government, which wants to return from Washington before Christmas with an agreement in its hood in order to give Argentines a little hope for the holidays.