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Argentina's Consumer Confidence Recovers with Relevant Nuances

February 21, 2025 (Investorideas.com Newswire) Investorideas.com, a go-to platform for big investing ideas releases market commentary from Quasar Elizundia, Expert Research Strategist at Pepperstone.

The recent evolution of consumer confidence in Argentina shows signs of economic recovery, though with clear cautious nuances. According to the Consumer Confidence Index (ICC), confidence increased by 31.13% year-on-year but registered a slight 0.3% monthly contraction in February. This trend reflects the duality of the current outlook, where moderate optimism about the future (+1.33% in expectations) contrasts with the deterioration in the perception of present conditions (-2.76%).

Additionally, the Leading Indicator advanced by 1.12% in January and 5.14% year-on-year, supported by strong automobile sales, recovery in construction, and the rise in soybean prices. Notably, 70% of the IL components showed growth, suggesting a gradual consolidation scenario. However, there remains a 10.80% probability of exiting the expansion phase in the coming months, requiring a careful assessment of risks.

In line with this evaluation, the February ICC stood at 47.3 points, just below the highest level recorded since November 2023. The sub-indices show divergences: the intention to purchase durable goods fell to 34.4, and personal financial conditions declined to 49.54, while macroeconomic conditions improved slightly to 57.83. Furthermore, regional disparities persist: while Greater Buenos Aires and the Autonomous City of Buenos Aires recorded monthly increases (1.87% and 1.04%, respectively), the rest of the country experienced a 3.84% decline.

The data confirms that Argentina's economic recovery remains fragile and uneven, yet the year-on-year growth of over 30% in consumer confidence suggests a potential for improvement, provided that external conditions remain favorable and domestic demand continues strengthening. However, the monthly decline and the gap between income levels highlight areas with lower purchasing power and a perception of uncertainty in certain sectors.

Looking ahead, the momentum of key sectors, such as construction and agribusiness, along with policies that encourage investment and consumption, will be crucial in sustaining this delicate rebound. While the outlook offers reasons for cautious optimism, it is essential to manage expectations prudently and maintain a focus on macroeconomic stability. Only then can a scenario be consolidated where positive indicators gradually translate into more solid and equitable growth for Argentina."

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