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What does the market see three months before the beginning of the Javier Milei era?

What does the market see three months before the beginning of the Javier Milei era?

A week begins where eyes are on the progress of the Government of Javier Milei in political meetings to advance with their austerity guidelines, and inflation data (CPI) February that will be announced on Tuesday.

The ruling party called on the governors to hold meetings that aim to sign on May 25 the so-called “social pact” which would allow the government to advance with the reforms that it considers necessary to clean up the country’s economy, in the midst of high inflation and a growing poverty.

The Government announced a voluntary exchange of debt in pesos of instruments maturing in 2024 for other securities in 2025 and 2028, which would include bonds for a value equivalent to nearly $64 billion, to clear upcoming maturities.

Analysts and market specialists give their opinion on the current economic and political situation in the country.

“Attention is focused on the negotiations that are resuming with the governors in search of being able to once again promote the necessary reforms as well as the fiscal chapter in order to contribute to the sustainability of the improvement in public accounts,” said Gustavo Ber, economist. of study Ber.

“This is crucial to be able to extend the climate of better expectations, in the midst of a recession and still high inflation, since it could help cushion the effects on social mood by inducing that the greatest effort will be rewarded,” he noted.

“For the rest of 2024, a challenging economic year is expected for Argentina at a macro level, as fiscal, monetary and exchange adjustment measures anticipate a scenario with significant repercussions on economic activity and income for a considerable part of the year” , stated the consulting firm ABECEB.

He added that “however, the external sector will show positive dynamics, expecting a comfortable trade surplus at the aggregate level in a context of rising exports and falling imports.”

“Public investment in 2024 will be more affected in the provinces with lower current savings and greater dependence on national transfers,” stated the Mediterranean Foundation.

He added that for its part, “the inflation rate (for February) showed a slowdown, going from 21% in the last two weeks before December 10, 2023 to 11% in the last two weeks of February, with monthly data for both “Beyond this slowdown, it is necessary to indicate that inflation continues at a very high and potentially unstable level.”

“The CPI to be known this Tuesday would be around 14/15%. Although a lower value is not ruled out, the rapid deceleration of inflation may also be a consequence of the fall in the level of activity. Thus, a number that can being well seen has its cost,” said Roberto Geretto of Fundcorp.

“The outlook for the banking system remains negative due to severe operating conditions that restrict profit-generating potential and banking activities,” Moody’s Ratings said, noting that “the expected recession, rising inflation in 2024 and the ambitious “the new government’s reform agenda will impose significant implementation risks.”

“Clearly the market trusts, chooses to believe and is ok with many of the things that Milei proposes. Not only in terms of policies but also because it observes that the president is going to do what he has to do,” said Javier Timerman of Adcap Grupo Financiero. .

“It is clear that the government’s number one objective is to lower inflation, so the exchange rate delay is not a priority. In general, in the processes of lowering inflation, it should not be surprising that the exchange rate delay accelerates. It is more difficult for you to have a process of low inflation without exchange rate delay,” said economist Fausto Spotorno.

“We consider that although the ‘Bopreal’ (bonus intended to settle accounts with importers) is local law, the comparison with a global one is more pertinent over a bonar due to its better credit credibility,” stated Delphos Investment and explained that “For a profile with greater risk aversion, we believe that ‘Bopreal’ is a good option.”

A report from the Orlando Ferreres & Asociados Study Center indicates that real investment in the country fell 14.5% year-on-year in January measured in terms of physical volume (not counting the effect of inflation) and noted that when measured in dollars, an investment of 5,519 million per month is estimated.

Source: Ambito

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