The market anticipates a strong rise in inflation and the dollar

In the latest report of the Survey of Market Expectations (REM) published by the central bank (BCRA), analysts adjusted their forecasts for the year 2023, and the economic situation generates concern. The annual estimate of inflation experienced a significant increase, now standing at 169.3%.

This increase in forecasts comes after data from the Consumer’s price index (IPC) that the INDEC delivered on the corresponding day before to the month of Augustwhich reached 12.4%. It should be noted that the consulting firms that contributed to the REM had anticipated lower inflation11.8%.

Private measurements ensure that inflation for September will continue in double digits. The REM shows that analysts’ expectations about the Argentine economy is negative. In particular, the following points stand out:

• The expected inflation for 2023 was 169.3%an increase of 28.6 percentage points compared to the previous survey.
• The growth of Gross Domestic Product (real GDP) is expected to be -3.0% in 2023, a contraction of 0.2 percentage points compared to the previous survey.
• Unemployment is expected to be at 7.2% in the second quarter of 2023, without changes compared to the previous survey.
• The interest rate BADLAR of private banks is expected to rise to 124.5% in December 2023from the current 113.0%.
• The nominal exchange rate is expected to remain the same stable at $350 per dollar until October 2023and then start to depreciate.
• He primary fiscal deficit of the National Non-Financial Public Sector (SPNF) is expected to be $4,488 billion in 2023an increase of $344 billion compared to the previous survey.

These results show that analysts expect thatand inflation will continue at high levels in the coming monthsand that the Argentine economy will contract in 2023.

REM: inflation and dollar

The outlook is not more encouraging for the coming months. Analysts project amonthly inflation of 12.0% for September, and the annual forecast for the entire year 2023 remains at a worrying 169.3%, an increase of 28.6 percentage points compared to the previous survey.

In summary, according to REM data, inflation for the year 2023 has become at a critical point in the economyexceeding all previous expectations and generating uncertainty in the market.

On the other hand, regarding the official dollar, projections indicate that the price by the end of this year It would be around $510.01. Although during September and October no changes expected significant due to the policy of freezing the devaluation implemented by the Government, in November an increase to $405.47 per unit. By December, the value of the dollar is expected to exceed $500.

Looking ahead to 2024, expectations indicate that the dollar would continue its risereaching $669.81 in January and reaching $738.01 in February.

In addition to inflation and the exchange rate, the REM report also reflects a concern about the Gross Domestic Product (GDP), with a projection of a 3% drop by 2023, 0.2 percentage points less than previous estimates. By 2024, a decrease of 0.6% is expected.

It is important to remember that REM projections They are based on surveys of private consulting firms and do not constitute the BCRA’s own analysis.which means that they reflect the perceptions of the market and private analysts about the national economy.