June 19, 2013
That “spring break” of the IDEA symposium in Mar del Plata always unfolds at the same place, a broadly similar time and more or less the same people but somehow manages to have a different flavour each year. Perhaps the most salient features this year were a flirtation with socialism (or at least social democracy) at both regional and national level — former two-term Brazilian President Lula da Silva was the star turn with last year’s presidential election runner-up Hermes Binner and various leaders from his Progressive Broad Front (FAP) prominent among the supporting cast — and perhaps a more indecisive outlook than ever from the business community as to whether 2013 will prove a good or bad year. An indecision perhaps fully justified by an election year for which Deputy Economy Minister Axel Kicillof forecasts less public spending (rare enough in any country’s experience, never mind Argentina). And by a looming pesofication of the economy which would spell financial disaster — but could also boost industry and the productive sector by wiping out industrial debt in a massive shift of funds from savers much like the 2002 maxi-devaluation here (or Germany’s 1923 hyperinflation much further back in time), restoring a competitive edge to the economy after years of erosion.
Lula himself fully reflected this ambivalence — he was politically correct at regional level (delighting in the Hugo Chávez victory in Venezuela earlier this month but deploring Paraguay’s vote of non-confidence changing its president in mid-year as unacceptable, both positions shared with President Cristina Fernández de Kirchner) while making various comments which might make CFK uncomfortable such as the pernicious effects of inflation or the need to alternate leadership. But it is certainly novel to see IDEA wooing neither the government nor the business-friendly centre-right but the centre-left (both Lula and Binner & Co.) with both layoffs and strikes on the rise (incentives for job creation was an insistent theme).
IDEA participants generally expressed bafflement as to what government strategy might be. Perhaps it is time to let them into a secret — there is none with everything decided for the short term (an absence of ground rules which confounds some companies dependent on legal security but on which some opportunistic firms might thrive, hence the mixed outlook). More growth but also more inflation and less profitability — we will have to wait until next spring to learn IDEA’s verdict on 2013 as good or bad.