Miguel Pesce, president of the Central Bank
Economists ’predictions are often at a disadvantage. Often they do not take into account the political reaction, i.e., they do not think about the actions a government is taking to prevent the worsening of conditions. Although in Argentina the opposite is happening: the response of governments is exacerbating the problems.
While the Minister of the Economy, Martín Guzmán, and the Secretary of Commerce, Guillermo Hang, are arranging actions to curb rising prices, in recent hours the city’s economists have begun to recalculate their inflation forecasts.
Daniel Artana, Fiel’s chief economist, expects an inflation rate for the year of 87%. In May, he sees it at between 5.5% and 6%. In consultancy they expected a level of 70% for the year and now it has gone to 87%.
There are several reasons for this. The conflict between Russia and Ukraine continues without finding a solution and puts pressure on the value of Energy. In Argentina, tensions are also rising: the salary indexingang merchandise replacement costs and access to dollars by companies to import supplies. Furthermore, the Central Bank seems far to follow target reserve accumulation for the year with the IMF and the pressure to raise the dollar will increase. All this is what economists at this time shuffle to prepare the inflation figure.
The consulting firm Fiel expects, for example, a rate of 87%. “We raised our forecast from 70%,” said Daniel Artana, chief economist at the consulting firm.
For his part, Guido Lorenzo, from LCG, sees it at 80%. “It’s hard for inflation to slow down and end the year at 70% at this point”said the economist.
Guido Lorenzo, chief economist at LCG, expects the inflation rate for the year to be 80%. “It will be difficult for inflation to slow down and end the year at 70% at this point,” the analyst believes.
But didn’t inflation start to drop after 6.7% in March? “IPC can provide 80% and there is no month like March.”
The 80% rate for the year will exceed the record of the last survey of Central Bank market expectations in April (65%). When the year started, REM gave 54.8%. It is expected to rise again to around 70% when the next data is released on June 3. The program with the IMF, which was signed two months ago, also includes outdated inflation data (48%). This figure will be recalibrated in the analysis conducted these days by the technicians of the agency and of the Economy.
Ten days ago Clarín reported that the new floor for inflation was at 70%. “Today is the main scenario but the most optimistic. Now 80% I see it as something likely”said Andrés Borenstein, of Econviews.
Martín Redrado, director of Fundación Capital, estimates the rate at 72.5%. “We had that forecast 60 days ago. But we can change it anytime.”
Accelerating inflation in contexts such as the present is leading people and companies to review more frequently the forecasts of the variables with which they enter into contracts and budgets. Many of them are starting to think about plans for 2023. And no one wants to be left behind in the face of sudden cost increases. Therefore, expectations play a key role in preventing price increases and anchoring behavioral indexing. And since most analysts don’t see that the Government is heading towards a solution, they are starting to wonder if their inflation forecasts aren’t delayed compared to current dynamics.
The Broda Study, for example, has an inflation forecast for the year of 70%-73%. “But it’s a number. very conservative”, Admitted Miguel Angel Broda himself.
“We are dangerously entering a regime of high inflation. By 2022, we expect an increase of 72%”, said consulting firm Equilibra (Martín Rapetti, photo), in a recent work.
Martín Redrado, former president of the Central Bank and now director of Fundación Capital, said something similar. The inflation the consultant expects for the end of the year is 72.5%. “But we can change it.”
Consulting firm Equilibra taught the same thing in its latest work. “Two consecutive months of monthly inflation starting at 6% have combined the view that Argentina has taken another step in its inflationary dynamics: it is dangerous for us to enter a regime of high inflation. For 2022, we expect an increase of 72%. And no exchange rate jump, or another accelerator shock. We are not ignoring the upward correction ”.
The difference between economists who expect inflation of 70% or 80% can be said to have been established between those who believe (or do not) that there will be some measure of additional impetus to inflationary inertia. bill? dollars?
Andrew Borenstein
Finally, the main factor is the global context in the coming months. In July the Federal Reserve will raise rates again. There will be an impact on the region.
Source: Clarin
