World Cup and winter holidays boost card use: dollar balances grow 44.5%

Argentine credit card balances, particularly those denominated in U.S. dollars, have shown a significant surge, signaling a potential uptick in consumer spending. Dollar balances climbed 44.5% compared to the same period last year, while peso balances saw a 13.6% increase from the previous month. This growth is attributed to a confluence of factors, including travel for the World Cup, bookings for winter vacations, and the recent disbursement of mid-year bonuses.

According to Grit Capital Group's Research team, the five-day moving average for dollar credit card balances reached $753 million, a substantial rise from $521 million in July of the previous year. The firm highlighted that the increase in peso balances likely reflects advance payments and reservations for winter holidays made by middle and high-income households.

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The good news is that the credit impulse starts to show more credible signs of life.

The government of Javier Milei is keen to see credit become a cornerstone of economic recovery. However, analysts are divided on whether this uptick represents a lasting trend or is merely a seasonal fluctuation. While Grit Capital views the credit impulse as showing "more credible signs of life," other consultancies remain cautious.

Econviews, for instance, noted that real credit in pesos grew by only 0.2% in June, and even declined by 0.3% when seasonal factors are excluded. They observed that business loans performed better, while consumer credit remained constrained by high real interest rates and record levels of delinquency. Econviews anticipates credit growth in the second half of the year but does not foresee a significant boom.

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We expect that in the second half of the year credit will resume growth, although without reaching a boom.