The US investment bank provided devastating data for Argentina. He JPMorgan He forecast inflation of 138% for the next twelve months in Argentina and expects a jump in the exchange rate.
The projection is well above the effective rate of 113.2% that resulted from the latest interest rate hike by the Central Bank. “Our baseline scenario assumes monthly headline inflation of an average monthly 6.2% between March and June, which would accelerate to 7.0% in the second half”the entity calculated in a report sent to its clients.
JP Morgan indicated that this trajectory is consistent with inflation of 115% on December 23. “We assume a correction of the official exchange rate at the end of 2023 after the inauguration of the new administration in December. But the risk is biased to the upside, ”he pointed out.
Regarding retail prices, JP Morgan stated that after the bullish surprise in February, the central bank reacted with a 300 bp increase, with which the effective official interest rate currently stands at 113%,
“However, it still has not reached a positive ex ante real rate compared to our inflation expectations for the next 12 months, which stand at 138%,” he pointed out.
This forecast is far from the perspective he released just two weeks ago. At that time, the inflation expectation was 110% year-on-year and with no movements in the exchange rate. But the decision of the Central Bank made the goals run and the prospect of a significant drop in reserves as a result of the drought forced the numbers to change.
The recession seems a practically inevitable fact. According to JP Morgan forecasts, economic activity will collapse by 1.7% in the accumulated annual figure of 2023, and up to 2% in 2024. The country will again suffer the effects of two consecutive years in recession, and up to 13 years of stagflation since 2011.
The banking firm expects a total fall of 2.4% for the Argentine economy in the first quarter of 2023, 3.5% in the second quarter and a slight 0.1% towards the third quarter.. The change in expectations due to the arrival of a new government could lessen the recessive impact for the last quarter of the year, expecting a slight growth of 0.3%.
Source: Ambito
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