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Entrepreneurs are getting ready for a year of increased turnover, but decreased profitability


Feb 12, 2024

The latest edition of the VISTAGE Argentina Business Confidence Index paints an unfavorable scenario for the profitability of the private sector. This index has been prepared since 2006, and the study corresponding to the fourth and last quarter of 2023 included 355 businesspeople CEOs, senior executives, and business owners who gave their opinion on the current economic scenario in Argentina and the future of their organizations.

In the measurement, 83% consider that the economy worsened compared to a year ago, while 13% estimate that it remained unchanged and 4% believe that it improved. Looking ahead to the next 12 months, 50% think that the situation will get worse; 37% who will be better; and 13%, that there will be no changes.

Regarding investment in fixed assets for next year, 47% believe that it will remain the same, 31% indicate that it will decrease, and 22% that it will increase. With high inflation involved, 44% consider that their company’s turnover will grow in the next 12 months, while 32% say it will decrease and 24% do not expect changes.

Regarding the volume of units sold in the next 12 months, 43% of business leaders estimate that it will decrease, 31% say that it will increase, and 26% say that it will remain the same.

The Business Confidence Index also focuses on estimates linked to profitability. According to 55% of survey participants, profitability will fall in the next 12 months. For 26%, it will remain the same, and for the remaining 19%, it will increase.

On the other hand, paying attention to how the prices of the products and/or services that your companies sell will behave in the next 12 months, 61% of business owners predict that they will increase; 21%, which will remain the same, and 17%, which will decrease.

The employee workforce is another of the axes that the Index addresses. 58% state that it will remain unchanged next year. 25% emphasize that it will grow, and 17% indicate that it could reduce.

On the problems that companies face today, 43% of businessmen affirm that it is economic uncertainty, although they also point out problems linked to higher costs of energy, raw materials, salaries, etc. (24%); financial issues (14%); other inconveniences related to finding, hiring, retaining, or training personnel (10%); problems with growth too slow or too fast (8%); or other types of problems (1%).

Finally, those consulted estimate an annual inflation of 213% by 2024 (66 points more than they had indicated in the Business Confidence Index for the third quarter of 2023). And they consider that the exchange rate will be around $ 1.804 ($1,177 more than expected in the previous Index).

“The results of the Index convey the impact of political-economic uncertainty. The increases in prices of products and services and the decrease in the profitability of companies are some of the most worrying conclusions. However, almost 60% of business leaders do not believe that this will translate into a reduction in the workforce. It is a hopeful fact“said Guadalupe San Martín, CEO of Vistage Argentina.

By Editor

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