The Central Bank published its Market Expectations Survey this Friday (REM) monthly. There, the city’s main analysts They predicted that September inflation was 3.5%. Thus, they anticipate that, finally, 4% will be drilled for the first time in the Milei era. However, after the bad data in August, They recalculated upwards their projection for the accumulated 2024 and anticipate a relative stagnation at levels above 3% during the next six months.
The REM collected the forecasts of 28 local and international consulting firms and research centers and 14 financial entities in Argentina on the main variables of the economy. The survey published this afternoon was carried out between September 26 and 30. Over there, Respondents anticipated a continuation of the crawling peg of the official dollar until the end of the year and ratified their GDP fall projections for 2024.
What does the REM predict for inflation?
REM participants predicted monthly inflation of 3.5% for September. This is the same level that they had projected for that month in the last survey. However, it becomes relevant since for August they had forecast a CPI of 3.9% but finally the data published by INDEC surprised upwards by marking 4.2%.
If materializedthis would imply that in the ninth month of the year the 4% floor would have been breached for the first time during the current mandate. Furthermore, it would mean that (after the retrocession of the PAIS tax rate) inflation would have resumed the deceleration process after four months of stagnation.
In any case, the bad data in August had consequences on the city’s expectations. Respondents recalculated their forecast upwards for the annual accumulated: now they expect it to close at 123.6% year-on-year, that is, 0.8 percentage points more than in the previous survey.
For the following months, The forecasts remain far from the path promoted by the Government, which seeks to converge as quickly as possible to the 2% monthly devaluation. The REM predicts that inflation will be 3.4% in October, that it will drop to 3.3% in November, that it will rebound to 3.6% in December and that it will mark 3.4%, 3.3% and 3% in January, February and March, respectively.
This would imply that the CPI oscillates above a floor of 3% for the next six months, which would account for a continuity of inflationary inertia beyond the official adjustment plan. For the next twelve months, the average of those consulted projects a cumulative 41%.
Regarding the core inflation (which excludes seasonal and regulated prices), the REM anticipates 3.4% for September, 3.1% for October and November, 3.4% for December, 3.2% for January, 3% for February and 2 .9% for March.
image.png
Dollar: what does the market expect?
Bank consultants and analysts do They give credit to the continuity of the exchange rate table 2% monthly for the official dollar. The median of the REM’s nominal exchange rate projections was $981.60 for the October 2024 average, which would imply an average monthly increase of 2.1% in the exchange rate, the monetary authority highlighted. For the Top 10 forecasters, the expected average nominal exchange rate for October is $983.20.
Furthermore, for December, the group of participants anticipates a wholesale dollar at $1,021.50, very in line with what is budgeted by the Government. “The interannual variation as of December 2024 implicit in the forecasts was 59.1% (0.6 pp less than the previous REM),” said the BCRA. Of course, the continuity of the stocks plays a central role in these expectations.
The REM and the recession
On the other hand, respondents confirmed their previous projections about the fall in GDP for this year. In the new survey They predicted a collapse of 3.8%, the same level as in the previous edition. However, the Top 10 predicted a decline of 3.9%.
“The fall would have been concentrated in the first semester. According to the forecasts received, the level of activity would begin to recover in the third quarter of the year, with an increase of 1.6% without seasonality,” said the BCRA. By 2025the group of REM participants estimated a average growth of 3.5% year-on-year, very far from the 5% included by the Government in the 2025 Budget.
image.png
Other REM projections
The BCRA survey also yielded important forecasts regarding other key variables of the economy:
- The unemployment In the third quarter it was estimated at 7.8%, that is, 0.1 points below the previous REM forecast. By the last quarter of 2024, it is expected to reach 8%.
-
The Badlar rate of private banks was estimated for October at 39.7% TNA (equivalent to a monthly effective rate of 3.2%) and a slight decrease to 39% TNA in December.
-
By 2024, it is expected that exports (FOB) total US$77,610 million (US$247 million less than the previous survey) and the imports (CIF) US$58,651 million (US$512 million less than the previous survey). He trade surplus The resulting annual increase would increase by US$265 million to US$18,959 million.
-
It is anticipated a fiscal surplus primary of the National Non-Financial Public Sector of $8.69 trillion by 2024 ($861,000 million higher than the previous REM). No participant expects primary deficit for 2024 or 2025.
Source: Ambito
