We are in a diametrically different position compared to last year

The inflation rate of 1.9% is extremely promising. Not only because it broke the 2% mark, a figure that was widely discussed in the media, but for something even more important: core inflation was significantly lower at 1.6%.

Core inflation includes those goods and services that are not seasonal and do not have regulated prices. Therefore, the fact that this component was at 1.6% is truly a very important piece of information.

On the other hand, it should be noted that regulated prices are still suffering from the increase in fuel prices due to the situation related to the strait. As that situation stabilizes and seasonal prices stop working against us, we have a perspective of sustained decline in inflation.

Based on what July has shown, I believe there is an opportunity for inflation to fall below 2% again, despite it being a seasonally higher month. During July, vacations and the payment of bonuses lead people to spend more on tourist services and leisure. Therefore, having inflation below 2% in this context would be a very positive indicator.

Inflation no longer seems like an out-of-control phenomenon

We also received encouraging numbers from the economic activity side, especially in two sectors that had been more neglected than others and have a significant impact on employment: industry and construction.

The industry showed a timid growth of 0.4%, but growth nonetheless, in the month-over-month comparison. Although it still remains below the level of a year ago, the monthly figure represents a favorable signal.

In the case of construction, it was the most relevant because there was not only a 6.3% growth compared to the previous month, but also around 4.1% compared to a year ago.

If that monthly growth could be projected on an annual basis, we would be talking about a truly high expansion, close to 100%. This situation is possible, especially because there was a strong increase in the area authorized for construction. This, mainly linked to private works, allows for a favorable outlook for the coming months. Additionally, it is worth noting that public works tenders are already underway, specifically related to roads.

For these reasons, I believe that construction will gain significant momentum in the coming months, given its categorical impact on employment.

The recovery is beginning to reach lagging sectors

These signals are complemented by the relentless work of the Central Bank to strengthen its balance sheet. The entity has also been steadily building liquidity in foreign currency.

There were days when purchases exceeded 530 million dollars in a single day. The accumulated purchases are already above 12.6 billion dollars, while net reserves are around 10.6 billion dollars positive.

This occurs after a huge number of months in which Argentina had negative net reserves, a situation that had persisted since the Kirchner era. At the same time, gross reserves are around 49 billion dollars.

A Central Bank that is regaining its function

It is also important to analyze what has happened with the profits of the Central Bank. The distribution of profits is contemplated in current legislation, but in the past it was used as a true mechanism for draining the entity.

What was ultimately distributed were merely fictional profits, as they were simply the result of inflation.

The central mission of the Central Bank should be the preservation of the currency's value. However, when the currency was devalued, the value of international reserves denominated in dollars increased in pesos.

This accounting increase was distributed as if it were a profit. But since that liquidity did not actually exist, pesos had to be issued to transfer it. This created a vicious cycle, or rather a vicious spiral, in which the problem worsened year after year.

In this administration, the distribution of profits was fulfilled, but instead of converting those resources into spurious currency, the Treasury used them to cancel the infamous non-transferable notes.

The non-transferable notes were another mechanism for draining the Central Bank used during the Kirchner era. What was done in those years was to withdraw the entity's reserves and leave behind mere promissory notes.

These were notes denominated in dollars, non-transferable and with ten-year maturities, which were then renewed. In this way, the Central Bank lost liquidity and solvency.

On this occasion, those instruments were canceled with funds from the profits. That is, the resources returned to the Central Bank and did not turn into a new issuance of pesos.

In this way, the pernicious mechanism was ended and the situation of the entity was strengthened.

This monetary solidity also provides greater leeway to face the coming months and enter the next electoral year from a very different situation.

I believe that today we are in a diametrically different position than we were last year. The decrease in inflation, the recovery of important sectors such as industry and construction, and the strengthening of reserves allow for a truly encouraging outlook for the coming months.