City analysts’ updated projections reflected a reduction in inflation expectations for the coming months and for the accumulated period of 2024. However, they remain at levels higher than what the Government predicts and what the numbers implicit in the price of financial assets show.
The Survey of Market Expectations (REM) published this Monday by the Central Bank showed that the median of the forecasters consulted expects that both the consumer price index (CPI) for March and April will remain in double digits. And for the cumulative total of 2024, it expects 189.4%.
Specifically, for MarchREM analysts estimated an inflation of 12.5%, that is, 1.8% less than in the previous survey. All in all, this figure is closer to the February CPI (13.2%) than the number that Minister Luis Caputo aired in his last television interview: “Around 10%.” The official data will be published this Friday by INDEC.
For Aprilthe REM prognosis is that it will not pierce the two digits and that it will be located in the 10.8% (that is: 1.3 points less than in the previous REM). This is a month marked, among other things, by the sharp increase in gas rates.
In the following months, analysts’ inflation forecasts mark the following sequence: 9% in May, 8% in June, 7.8% in July, 6.9% in August and 6.2% in September.
The BCRA survey showed that the 37 REM participants (banks, consulting firms and research centers) They reduced their inflation forecast for the accumulated 2024 by 20.8 percentage points compared to the previous survey. Now, the median of the projections was located at 189.4%. If realized, this would imply a reduction of 22 points compared to the 211.4% that the CPI accumulated in 2023, in the context of a deep recession with monetary and fiscal adjustment and a collapse in consumption.
Anyway, This updated forecast from the main consultants is far from the inflation implicit in the prices of Treasury bonds and bills. in the secondary market. According to a recent calculation by the consulting firm 1816 that compared the performance of the LECAP as of January 2025 and the BONCER T2X5, for the annual effective rate of both instruments to be equal, “inflation in 2024 should remain at 157%.”
Regarding the Core CPI (which does not include seasonal or regulated prices), the group of REM participants placed their forecasts for 2024 at 179% year-on-year, that is, 27.3 percentage points less than the previous survey.
GDP: when would it rebound, according to the REM?
On the other hand, the REM reflected the expectation that the recession will be acute this year. The median of analysts projected a level of real Gross Domestic Product (GDP) 3.5% lower than the 2023 average. The prognosis was the same as in the previous month’s survey. However, those who constitute the Top-10 of the best forecasters projected, on average, a reduction of 4.1% for activity during the year.
“The fall would have been concentrated in the first quarter, a period for which those responding to the REM estimated a reduction of 3.8% without seasonality in GDP” (0.1 points less than in the previous REM), noted the BCRA report. .
According to forecasts, the level of activity would begin to slowly recover in the third quarter of the year, with a quarterly increase of 0.6% without seasonality. A more significant increase is expected for the fourth quarter of the year, of approximately 4.1% seasonally adjusted. By 2025, the group of REM participants estimated an average annual rebound of 3% year-on-year.
On the other hand, the survey showed the expectation that the open unemployment rate for the first quarter of the year has been located at 7.1% of the Economically Active Population (EAP), implying a reduction of 0.6 points with respect to the Previous REM. The group of participants expects it to advance to 7.5% in the last quarter of 2024, which would imply an increase of 1.8 percentage points compared to 5.7% in the same quarter of 2023.
REM: what is expected for the dollar and the interest rate?
Those participating in the REM predicted that the BADLAR rate of private banks, for April, will be at 71.9% TNA (equivalent to a monthly effective rate of 5.9%), slightly above the 71.38% at which it closed this Monday. In addition, they projected that the cycle of yield cuts (within the framework of the blender plan) will continue for the remainder of the year: the forecast is for it to decrease to 60% TNA in December. Meanwhile, there is an expectation among operators that the BCRA may announce a new reduction in the reference rate in the coming days.
The median of REM analysts forecasts the nominal exchange rate at $876.3 per dollar for the April 2024 average (-$51.5 per dollar compared to the previous REM), which implies that consultants believe that the crawling peg will continue. around 2%. The interannual variation as of Dec-24 implicit in the forecasts was 124.0%, 26.8 points lower than the previous REM.
This would occur, according to the REM, in a context in which 2024 would close with exports (FOB) for US$80,842 million and imports (CIF) for US$65,162 million, correcting both downwards in comparison. with the previous survey (US$771 million and US$1,660 million less, respectively).
“Finally, the projection of the primary fiscal surplus of the National Non-Financial Public Sector (SPNF) made by those participating in the REM was located at $4,924 billion for 2024 ($4,138 billion higher than the previous REM). The average of the Top-10 forecasts a primary surplus of $4,152 billion by 2024,” the Central report noted.
Source: Ambito
