Buenos Aires, Feb 14 (NA) – “Opening up comes before cost reduction for many companies, and that's why they can't keep up,” stated economist and small business owner Gustavo Lázzari, describing Argentina's new economic model.
“As markets open up worldwide, beef is becoming scarce, and Argentina has once again become a major player,” he noted. He also mentioned that this phenomenon is boosting other proteins. “As beef is substituted, the cut that goes abroad is replaced domestically by pork or chicken and also partially by processed meats,” he detailed on Splendid AM 990.
In this context, he reported a growth rate close to 4% year-on-year. “It's a good year within a good year, considering stability and opening up. However, profit margins are shrinking and the payback periods for investments are lengthening. Inventory is no longer a profitable business; the key is to rotate capital,” he explained.
Under this scenario, he differentiated three groups of companies: those that decide to shut down and focus on importing; those that are financially sound and can adapt; and a large group that faces financial problems. “If you used to bill 100, had a cost of 80, and could cover your past debts with the remaining 20, today you bill 100, have a cost of 95, and the remaining 5 is not enough,” he explained.
Lázzari emphasized that the result will depend on the coordination between economic opening, tax cuts, and business modernization. “We need all three trains to move forward at the same time,” he concluded.
“Without political trust, the private sector's engine will never start,” he added.
Overall, however, he described the economy as “stagnant” with lower returns. “The macroeconomic picture is changing, tending towards stability and openness, greater competitiveness, and formalization,” he said.
“When the tax burden on salaries far exceeds 100%, it's reasonable that some SMEs cannot afford to pay,” he stated, commenting on tax pressure.
He also linked informality to tax pressure: “Informal labor is a child of the size of the tax.”
According to his analysis, the transition to a more stable and open macroeconomic environment exposes a third of SMEs to an urgent need for restructuring due to a lack of financing and debt burdens.
“The macroeconomy is showing signs of order – accumulating reserves and a declining dollar – but the impact on the real economy is uneven,” Lázzari explained.
“I hire a mason to expand a factory, and that mason becomes a driver of consumption,” he gave as an example, describing how new private investments can create jobs and productive chains.
“The most generous salaries are children of investment,” he assured.
“The focus of labor reform should be the reduction of litigation. It is designed to reduce litigation, which is very important,” he stated.
