How much will the dollar and inflation reach this year, amid uncertainty over the debt with the IMF

January 19, 2022

Regarding the exchange rate, they noted that the peso will continue to depreciate due to high inflation. In that sense, they projected that in 2022 and 2023 the dollar will close at $158.76 and $217.91, respectively REUTERS/Rick Wilking

The main economic consultants in Argentina anticipate that by the end of the year inflation will reach a percentage of 51.4% and the official dollar will have a value of $158.76. The forecasts correspond to the January edition of Latin Focus, the monthly projections report for Latin America by the international consulting firm Focus Economics.

Regarding the price increase, the consultants involved highlighted: “Inflation is expected to be 51.4% at the end of 2022, which represents an increase of 1.6% points from last month’s forecast.” And they added that the estimate is that it will slow down to 41.4% by the end of 2023.

The highest inflation projection for this year was that of the Econometric consulting firm, which estimated a rise in consumer prices of 60.8%. While the most optimistic estimate belongs to Fitch Solutions, with 32.9 percent.

Regarding the exchange rate, the highest price was that of Fitch Solutions, who expect it to have a relationship of $181.05 per dollar. While the lowest was that of Moody’s Analytics, with a relationship of $134.47 per dollar.

In this context, they indicated that The economy is forecast to expand 2.3% in 2022, unchanged from the previous month’s forecast, while in 2023, analysts see growth at 2.2%.

“GDP should expand at a markedly slower pace this year as the favorable base effects fade. Pessimistic consumer and investor sentiment amid protracted macroeconomic imbalances will restrain growth. Additionally, policies and issues related to the pandemic pose downside risks, as does the uncertain outcome of debt workout talks with the IMF., noted the report on Argentina.

In this regard, the analysts who are part of Focus Economics noted that the economy recovered in sequential terms in the third quarter of last year, supported by the relaxation of restrictions.

GDP should expand at a noticeably slower pace this year as the favorable base effects fade. Pessimistic consumer and investor sentiment amid protracted macroeconomic imbalances will restrain growth

However, they noted that “underlying momentum should have softened in the fourth quarter”. For consultants, the drop in activity in October added to “stubbornly high” inflation in the last quarter of 2021 “probably limited consumer spending.”

The analysts surveyed considered that private consumption will close at 3.8% in 2022, which represents an increase of 0.3 percentage points from last month's forecast Adrián Escandar
The analysts surveyed considered that private consumption will close at 3.8% in 2022, which represents an increase of 0.3 percentage points from last month’s forecast Adrián Escandar

In that sense, they foresee a 2022 with not so favorable macro conditions. “Clouds are gathering over the economy in the first leg of the new year: Covid-19 cases have soared to record numbers amid the spread of the Omicron variant, while the Government authorized an increase in electricity prices and natural gas in an attempt to reduce the fiscal deficit”, they analyzed

They also stated that meanwhile, the sovereign bond market is experiencing “some turbulence as the country struggles to reach an agreement with the IMF for the payment of its USD 45 billion debt, due to differences over the path to reduce the deficit.

According to analysts, GDP should expand at a noticeably slower pace this year as the favorable environment base effects fade. In addition to this, they indicated that the pessimism on the part of investing consumers, added to prolonged macroeconomic imbalances, will make growth for 2022 “limited”.

Panelists noted that the economy will grow 2.3% in 2022, unchanged from last month’s estimate, and 2.2% in 2023.

In another order, FocusEconomics analysts considered that the Central Bank’s monetary policy rate will close 2022 at 43.07% and 2023 at 40.45 percent.

Regarding the exchange rate, they noted that the peso will continue to depreciate due to high inflation. In that sense, they projected that in 2022 and 2023 the dollar will close at $158.76 and $217.91, respectively.

While, panelists participating in LatinFocus Consensus Forecast expect industrial production to expand by 3.5% in 2022, which represents an increase of 0.9% points from last month’s forecast. For 2023, the panel forecast industrial output growth of 2.1 percent.

Finally, the analysts surveyed considered that private consumption will close at 3.8% in 2022, which represents an increase of 0.3 percentage points from last month’s forecast, while they expect exports to decrease by 1.3% in 2022 and imports expand by 4.6%, “pushing the trade balance to a surplus of USD 11.5 billion.”

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Reference-www.infobae.com