Economics: A few positive signs but still a long way to recovery
Some of the economic indicators released over the past months proved to be more mixed than the dismal, depression levels reported for the mid-to-late spring amid pandemic lockdown measures that were applied to most industries. July produced another contraction of industrial activity, but this time it was only barely within double-digit range following months in which the sector saw activity contract by roughly 30%. However, only two of 21 manufacturing segments showed a positive variation, and several segments are still falling by more than 40%.
While we are starting to see evidence of renewed growth in some very specific segments of export activity, there is as yet no sign that this development heralds a clearer and much broader recovery trend in all sectors. Furthermore, we face continuing risks that new obstacles to a resurgence of external demand could emerge in the coming months.
In the labor market the underemployment rate (people currently working who state that they need and are available to work longer hours at their current jobs) remained at 18.4%, far above the readings of July 2019 (7.9%). This has very negative implications in terms of private consumption perspectives.
And regarding this year’s budget debate, the government’s budget package for 2021 is predicated on optimistic assumptions that further erode the administration’s ability to regain any of the credibility it has squandered and do nothing to address the heightened sense of uncertainty and distrust heading into next year.
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