A few days after the inauguration of Javier Milei as the new president, a new survey carried out among more than 40 bank economists and national and foreign consultants, concludes that a strong exchange rate jump in 2024.
The signature report FocusEconomicsalso projects the expected levels of inflation and activity for the entire next year.
Dollar: what to expect for the first year of government
The document maintains that the wholesale exchange rate that today is around $363 “is not sustainable over time, especially when free references are above $900.” Therefore, it is expected a strong exchange rate jump in the wholesale market to adjust to the value negotiated in the operations.
The consensus among economists surveyed by FocusEconomics indicates that the wholesale dollar will be around the $1,469.5 by the end of December 2024, approximately $119 more than expected last month. This projection suggests a 305% increase from the current price of $363.1, significantly exceeding the inflation forecast for the entire year 2024which is estimated at 222.4%.
Dollar: the projection of the banks
In this way, BBVA Argentina predicts that the official dollar will be at $1,483; Banco Supervielle estimates it at $1,829; HSBC does it at $1,700; Itaú Unibanco gives you $1,550; Credicorp Capital does it at $1,403; Banc Trust & Co estimates it at $1,336; UBS at $1,350; Barclays at $1,180 and Citigroup Global gives it $1,050.
Inflation: what analysts said
The report reveals forecasts on the levels of inflation and activity expected for the entire year 2024. For the economic consensus of the City, the country is entering unknown territory after Milei’s victory. His firm intention to drastically reduce the fiscal deficit in 2024 and announce the privatization of state companies, of course, influenced analysts’ projections.
In relation to anticipated inflation and economic activity, Experts predict that next year’s inflation could reach almost double the current year’s average. The dynamics are expected to have effects delayed that will limit consumption, although an increase in exports is expected to cushion the slowdown.
However, the shift towards more market-friendly policies is seen as a long term risk, with social unrest possibly delaying reforms.
Stagflation: Javo’s promise
In this scenario, FocusEconomics experts estimate a 1.4% contraction in the Gross Domestic Product (GDP) for 2024, with an expected expansion of 2.7% in 2025. As for inflation, next year it is expected to average almost double that of 2023, projecting a 222.4% increase in consumer prices by 2024.
The economic forecasts for Argentina in 2024 are challenging, as can be seen from the document. Inflation is expected to double, economic activity will contract and The official wholesale dollar could climb more than 300%.
These scenarios are explained by Milei’s intention to execute shock policies to reduce the fiscal deficit and eliminate exchange controls.
The success of these policies will depend on a series of factors, among which stand out the new government’s ability to generate investor confidence and the reaction of economic actors to these changes.
Source: Ambito
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