The most critical and the pure libertarians agree: the whitewashing was a “game changer”. The leg of the program that faced the greatest challenges in the second semester and on which disinflation and, to a large extent, the positive image of the Government also depended, was the exchange rate. And the Government got a bridge.
According to PxQ, this allows Javier Milei to think about 2025 without the external imbalance threatening, via a devaluation, the downward trajectory of inflation. The consulting firm led by former Vice Minister of Economy Emmanuel Alvarez Agis, for the first time since 2017, assigns more probabilities of occurrence to the optimistic scenario than to the base scenario.
Optimistic scenario
If the projection is confirmed, 2025 could become “the year of the Lion”. The characterization of one of the firms most respected by the market refers to the fact that the market’s optimism would allow the Government to sustain the combo of growth and lower inflation.
This scenario contemplates GDP growth of around 5% and inflation of 22.8%. The variation in the exchange rate would be 13% and the dollar would close the year around $1,162. In that case, an evolution of private sector salaries of 27% is expected, which would leave them above the average increase in prices.
Marina Dal Poggetto He chose a particular way of characterizing the projections. The first scenario is called “keep going, it works” and foresees a GDP growth of 4.9%. In that case, inflation would be around 24% and the expansion of private consumption would be around 6.3%.
But it also raises a second scenario, the “keep going, it doesn’t work.”. Under this hypothesis, GDP growth would be 4.4%, the recovery of private consumption would be 3.4%, the dollar would reach $1,700 and unemployment could rise to 9%.
Risks
For the Alvarez Agís consultancy, “The main tool to reactivate the economy with a simultaneous decrease in inflation lies in exacerbating the loss of competitiveness of the Argentine economy, in a framework in which the Government makes decisive progress in opening the economy. ”.
A job of 1816 agrees that the debate on the level of the exchange rate will continue because “between June and November there was a cash-based current account deficit every month.”. Furthermore, he maintains that the dollar, measured at the official rate and at the CCL “is at levels rarely seen since the exit of convertibility and that is already beginning to be seen in the balance of payments.”
As an incentive, the consultant highlights that Offshore exposure to pesos is almost zero. According to INDEC, in September 2024, foreign investors had only US$762 million pesos in portfolio investments, while in 2017 that figure amounted to US$25,000 million. “It is indisputable that non-residents have almost no pesos,” the report highlights.
The Government stands up and assures that exchange rate stability will continue. The hypothesis has adherents. To Invest in the Stock Market, “the strong peso is here to stay.” IEB justifies this statement with the confidence in the country that is perceived from abroad, the liquidation of exports, the projects promoted by the RIGI and the improvement of the energy balance.
Source: Ambito
