Argentina: Analysts raise inflation expectations to 90.2% in 2022

Market Analyst Monthly Report Central Bank of the Argentine Republic (BCRA) reflected a jump in its retail inflation forecast for the country this Friday, forecasting an annual rate of 90.2% for December 2022, up 14.2 percentage points from the previous month.

This forecast included in the report Overview of market expectations (REM) published this Friday is in line with the analysis of the last week of July 2022.

Partial projection on evolution retail prices for 2023, it also increased from last month’s survey, reaching 76.6%, reflecting an increase of 12 percentage points.

Thus, inflation expectations have moved away from the ranges of 52-62% for 2022 and 46-54% for 2023 projected in the recently revised assumptions of the agreement reached by Argentina with International Monetary Fund (IMF) refinance debts for more than 40 000 millions of dollars.

Inflationary situation

Inflation in Argentina, one of the highest in Latin Americaregistering 64% year-on-year growth and 5.3% monthly growth in June 2022, according to National Institute of Statistics and Censuses (Index), which will publish the consumer price index for July 2022 next Thursday.

The BCRA Expectations Report projects monthly inflation of 7.5% in July 2022, which will ease to 6% m/m in August.

On the other hand, experts expect GDP in Argentina will grow by 3.4% in 2022, up 0.2 percentage points from the previous measurement, and they forecast that GDP increase by 1.5% in 2023, 0.3 percentage points lower than the percentage forecast in the previous month.

In this sense, market forecasts also differ from the agreement with IMF, which predicts that GDP Argentinawhich grew by 10.2% last year, will grow by 3.5-4.5% this year, according to IMF.

In addition, for December 2022, experts predict a nominal exchange rate of 167.57 pesos per dollar, compared to the value of 132.89 pesos per dollar at the close of this Friday in the official wholesale market. Argentina.

Changes in Argentina

There was strong price commentary throughout July, helped by the bounce in the exchange rate following the unexpected resignation Martin Guzman as Minister of Economy and his replacement by Silvina Batakiswho remained in office for 24 days before being appointed to his place Serge Massa August 3rd.

Massa promised, suggesting that he would fight inflation as one of his priorities, calling it the “greatest factory of poverty”, a scourge that affects 37% of its 47 million inhabitants.

Since the inauguration of the new minister Economy The gap between the official exchange rate of 139.89 pesos to the dollar this Friday and the parallel black market rate of 293 pesos to the dollar narrowed after exceeding 100% in previous weeks.

The stock market also recorded growth at the end of the week, adding 2.90%.

In his first statement as minister Weight He promised to halt the issuance of money, cut utility subsidies, and meet the budget deficit target to 2.5% of the budget. GDP agreed this year International Monetary Fund.

(According to EFE and AFP)