Inflation, rates, and economic activity are some of the variables that a bank projected for the second half of the year.
Inflation, rates, and economic activity are some of the variables that a bank projected for the second half of the year.
Telam
The fiscal balance is the cornerstone of the economic programdetailed a BBVA Research report “Argentine Situation” for the Second Quarter 2024. The analysis also detailed what will happen with inflation, interest rates and economic activity.
In this regard, the financial institution recalled that The Government managed to accumulate a financial surplus of 0.4% of GDP so far this yeara better result than expected, “although now the challenge is to guarantee the sustainability of this dynamic in the future, replacing distortive taxes and consolidating the spending cut.”
In another section he maintains that Inflation has been on a downward path from the peak of 25.5% in December 2023 to 4.2% in May. “The missing relative price adjustments will slow down the decline in inflation going forward. BBVA economists project annual inflation of 140% in 2024,” they explained.
They later analyzed: “In a scenario of acute monetary astringency, The national government has initiated a process to manage the liquidity of the economy through short-term Treasury bills (LECAP) in instead of passive repos from the BCRA. Towards the end of the year, BBVA Research estimates that real interest rates will already be in slightly positive territory.
The report maintained that the correction of the country’s macroeconomic imbalances deepened the recession in the economy. BBVA Research economists in Argentina expect that the reactivation will begin in the third quarter of the year. “By 2024, an average drop in GDP of 4% per year is expected, and a recovery of 6% in 2025, driven by investment and the reactivation of private consumption,” they explained.
And then they maintained: “The external accounts will improve in 2024, due to the drop in imports due to the recession, the recovery of agricultural exports in a year without drought and the positive balance of the energy sector balance due to lower purchases of imported gas. and increase in oil exports. “The surplus balance of the energy sector is expected to approach US$4 billion (while last year it was neutral).”
Among the risks present for the current economic dynamics, one of the main ones, according to this report, would be a decrease in social support that makes fiscal consolidation difficult (the pillar of macroeconomic policy), which could hinder disinflation and exchange rate stability.
Source: Ambito
