Description

Going forward, most firms expect a deterioration in the performance of the economy and are factoring into their decisions a projected drop in activity in 2023. Several respondents indicate that they are already preparing their businesses to deal with this situation by adjusting their budgets, revising their staff levels and, in general, prioritizing decisions that support cost reduction and efficiency gains. 

The assessment of current businesses continues to point to a worsening performance, although in several cases at a slower pace than in the previous quarter. This is observed in a context where sales have stabilized their declines, and most respondents acknowledge that the drop in sales was to be expected after the unusual high levels of the previous year.

Regarding costs, the firms report that the pressures of previous quarters have begun to ease, although they are still very significant. Part of this incipient relief is related to a gradual normalization of supply chains, which has resulted in margins moderating their narrowing trend.

The firms report that selling prices continue to rise, but at a slower pace than in previous quarters. When asked about the reasons for the increases, they indicate that the rises of the last three months were mainly due to the increase in costs already observed, and not so much to the expectation that they will further rise in the future. On the other hand, firms that have maintained or lowered their prices emphasize a mixed nature of this decision, associated both with the past decrease in their sales and with the expectation of a greater weakening of these.

The firms expect costs, margins, and raw material availability to continue to normalize in the months ahead, with sales levels maintaining their expected rate of decline and selling price expectations rising very modestly. 

The percentage of firms planning to invest next year has decreased compared to a year ago. Among the main reasons for not investing are economic uncertainty and insufficient demand. It is worth noting that political uncertainty has significantly reduced its prevalence compared to a year ago. 

Most respondents continue to expect inflation to be well above its normal level over the next 12 months. However, its prevalence has declined significantly relative to previous quarters.