After December devaluation past and continuous publication of relative pricesTHE projections for the economy They have gotten worse this month. A LatinFocus Consensus Forecast survey, which collects projections from local and international banks and consultancies, shows a forecast of further devaluation by 2024 is one inflation that would reach 280% this year.
“In December, new President Javier Milei used emergency decrees to implement large spending cuts, tax increases and a sharp devaluation of the peso. He also unveiled a series of reforms to liberalize the economy. In January, the IMF agreed to allocate 4.7 billion dollars for the country, praising Milei’s reforms”, he summarized, but expressed the market’s caution due to the political risk of these reforms: “However, although the measures took effect immediatelythese could be revoked by Congress controlled by the opposition”.
The analysts participating in this study They increased their inflation projections for 2024 compared to what they responded a month ago. “This year, Inflation is expected to double more than after the elimination of price controls and the reduction of the gap between the official and parallel exchange rate,” the work explains.
The rapporteurs consulted now expect that the CPI which measures the The index rises above 280% on average 57.7 percentage points compared to the previous measurement. Analysts expect it too “the blender” that Luis Caputo turned on in December continues to work and they see that the economy’s key rates could end the year in the order of 74.7% and continue their reduction into 2025.
Although the Central Bank has promised a monthly depreciation of the peso of around 2% for these first months of the year, after the December devaluation, Banks and consultancies expect a sharp increase in devaluation before 2025. According to their projections, the official dollar could pass from the 816 dollars with which it closed last Friday to 1700.4 dollars at the end of the year.
“There is great uncertainty on the prospects of weight, given that a greater convergence between the official market and the parallel market cannot be ruled out. Having said this, a greater depreciation seems inevitable this year”, observes the study which notes the “dispersion” in the responses of the analysts consulted, who look from a dollar at $935 up to a dollar exceeding $3,000 by the end of 2024.
“Much depends on the success of President Milei’s reform program. If the new government’s attempts to quickly revive the economy, sharply reduce the fiscal deficit and slow down money issuance prove effective, demand for the peso will strengthen and the currency should stabilize,” the newspaper warns.
SN
Source: Clarin
