INDEC justifies methods after economists question growth figures

Argentina’s statistics institute, the INDEC, came out to explain how it reached its economic activity figures for September after the data showed growth when many economists had been expecting the economy to tip into recession. The institute said the increase was mainly because of a statistical correction resulting from its seasonal adjustment procedures and the strong performance of the financing sector. Adding the latest data involved estimating the figure after seasonal adjustment. This involves “recalibrating previous months and the way in which the series is distributed,” the INDEC wrote in a statement. That means that, while the trend was previously interpreted as “irregular”, once September’s data was incorporated, the trajectory shows a positive trend. September’s performance is mainly explained by the growth in the finance sector, the institute added, as growing volumes of bank loans and deposits create increased demand for financial services and generate more banking commissions. Moreover, stockbrokers and brokerages traded more government securities. The INDEC has been led by Marco Lavagna since 2019, when Peronist President Alberto Fernández was in office. On Tuesday, the INDEC reported that the country’s economic activity increased by 0.5% in September compared to August and by 5% relative to the same month of the previous year, a surprise to analysts who were expecting a recession. The INDEC measures the activity using the monthly economic activity indicator. This is an early indicator of the country’s GDP, which is calculated annually. The trustworthiness of Argentina’s official statistics is a delicate political issue. During Cristina Fernández de Kirchner’s presidency, between 2007 and 2015, the INDEC was taken over by then-commerce secretary Guillermo Moreno and produced unreliable data. Seven out of eight months revised Analysts pointed out that the data INDEC released on Tuesday included revisions to seven of the previous eight months, compared with August’s data. August’s report said that the economy was 0.1% smaller in January and July, while September’s document showed that activity had grown by the same amount in those months. “Through sleight of hand, INDEC avoided recession,” economist Alfredo Zaiat told El Destape Radio. “Most market consultants say that the economy was not growing.”  Analysts and industry associations also pointed out that, even according to the INDEC, the manufacturing sector is in decline. Raúl Llaneza, deputy secretary-general of the State Workers’ Association union and a union representative for INDEC, told the Herald that he did not believe there had been “any kind of manipulation.” However, he understands that the figure could raise suspicions, as “there was no expectation of a shift from negative to positive trends during a crisis in [Argentina’s] industry, with formal jobs declining and informal work on the rise.” ‘Productive Argentina lags behind’ Carlos Rodríguez, who was on President Javier Milei’s team of economic advisors before the leader took office, wrote on X that “productive Argentina lags far behind financial Argentina,” adding: “That’s no way to build a country.”  Economist Diego Giacomini, who authored several books with Milei before the pair fell out, tweeted that 64% of the year-on-year growth was down to the government increasing taxes on private entities but cutting subsidies, as well as banks increasing interest rates on goods and services companies. Llaneza said that the INDEC should be able to anticipate changes in the trends. “If we do not, we fall into arrogance, into the cynicism of saying ‘the numbers speak for themselves,’” he said. “The truth is that they do not — INDEC unfortunately comes from a disastrous experience that was the 2007-2015 period.”