2023 is shaping up to be a year of multiple economic challenges, and the presidential race, with its associated uncertainty, only seems to deepen that dynamic. With inflation continuing to flirt in the triple digits and interest rates inevitably remaining high, pockets will not recover and activity will stagnate.
This is the gray landscape they have raised more than 40 market operators, between banks, consulting firms and mutual funds, surveyed in the latest report by Latin Focus Consensus Forecast. Argentina will share a trend with the rest of the countries in the region, even if its reality looks more bleak: while In the other Latin American nations, growth will slow down, while in the country it will drop slightly.
“The economy is generally expected to stagnate this year. Domestic demand is about to contracthit by inflation and skyrocketing interest rates, savings exhausted and with an unfavorable economic backdrop on the eve of the general elections in October,” the report notes, which also warns against “significant risks to debt payment” and a “pre-election policy deployment” that is hostile to the market
Thus, the projections of this survey indicate a contraction of the economy of 0.1% this yeara worse estimate of 0.2% than expected a month ago and a slight rebound of 0.5% in 2024.
At the same time, contrary to government projections, these market participants believe that after closing at around 95% last year, inflation “should have a significantly higher average value than in 2022fueled by falling pesos and monetary deficit financing”.
The main risks economists see are “volatile energy prices” and “the tax generosity before October”. Thus, they now expect inflation to end 2023 at around 97.7% and only fall to around 77% in 2024.
While these are averages, there are several analysts who expect it that inflation actually exceeds 100% this year: The most pessimistic are consultancy boutique EMFI and Eco Go, who estimate price increases in the economy to be over 117%.
As for the price of the dollar, the specialists consulted do not see changes in the Central Bank’s exchange rate strategy, but they do see a acceleration of weight depreciation. Then, they calculate it By the end of the year, the official dollar will stop at $342 and that this value rises to $603.8 by the end of 2024.
This combination of higher inflation, high rates and the rising dollar will affect consumption. The speakers consulted see a 0.4% drop in private consumption this year and a slight rebound of 0.6% for the next.
Source: Clarin
