Consumption has bounced back in Argentina in the few last months, several consultancy agencies agree, although the rise is modest when seen against previous election seasons.

A growth of 1.2 percent compared to 2014 was seen in the first six months of the year according to the Kantar Worldpanel’s Consumer Insights report, which tracks consumption patterns at thousands of homes in Argentina through scanners that register their purchases. This was an improvement on the 2.2 percent drop that the international agency had registered in 2014.

Local economists agree about the trend, with two reports published yesterday seeing it as a consequence of government policy to raise the amount of cash in consumers’ pockets during the election cycle, but argue that this policy is reaching its limits.

“Since the beginning of the year, the government has focused its efforts in stabilizing the economiy and boosting consumption. This has been the case in almost every election year, with the government trying to shore up the variables that are relevant for electioneering,” the Ecolatina consultancy agency directed by Marco Lavagna, who works with opposition presidential hopeful Sergio Massa, said yesterday.

According to Ecolatina, however, those policies are having less of an impact when compared to previous elections. Their report quotes a dozen of economic variables linked to consumption such as purchasing-power, sales of food, clothing and appliances, credit card spending, imports and others, and although improvement has been seen in the last few months in most of them, it is far from the levels seen in 2011, when two-digit growth was a common sight in several categories.

The consumer confindence index tracked monthly by the Universidad di Tella has also shown significant improvement in the last few months, and the comparison with the last presidential election doesn’t look too bad either, as the current 56.1 points are not far from the 58.1 points in 2011. Confidence in the government tracked by the same survey, however, has dropped from 49.6 percent to 40.8 percent.

Questions were raised on how long this improving trend could last.

Another consultancy, Econométrica, said yesterday that “the currency swap with China saved the year and isolated the country from global upheaval. The commercial dollars went missing due to the collapse of soybean prices but, with impressive syncronicity, the dollars from the Chinese swap appeared. This shift from commercial dollars to financial dollars helped avoid devaluation and even encouraged the government to use a cheap dollar to stimulate consumption, but it also meant sustaining an exchange rate lag which is costing US$830 million per month.”

Their numbers show the economy’s output growing at around 0.8 percent while public spending and tax collection rise 38 and 36 percent respectively and salaries also recover, but the growing pressure on dollar reserves causes analysts to doubt the trend’s sustainability.

Ecolatina was similarly sceptical, saying that “the exchange rate lag brings political results without a doubt, by containing inflation, making salaries grow when measured in dollars and boosting tourism abroad, but it damages macroeconomic sustainability by damaging industries and regional economies.” This “cheap” dollar, in turn, creates added demand for Central Bank reserves and boosts speculation about the value of the peso in the future, the report argued.

Kantar’s survey includes details about how the recent recovery took place. “It was based on growing amounts of purchases each time Argentines go shopping, even if the frequency of visits to markets kept dropping,” its Country Manager Ariel Martínez explained. Personal care products saw a five percent rise, bouncing back from a poor 2014 in which consumers had gone back to basics due to diminished purchasing power.

The growing demand was also seen in beverages and cleaning products, which grew by two percent, while the acquisition of edible products remained stable. The middle-lower end of the economic pyramid was behind the general improvement, but budget cuts seemed to be evident at the lowest end, where non-basic purchases dropped by five percent.