阿根廷经济展望-英-27页_1mb

Summary of Argentina Economic Outlook (October 2023)

Global Economic Outlook

• Global growth is expected to decelerate, with projections at 2.9% for 2023 and 3.0% for 2024. The United States shows resilience in domestic demand, avoiding recession, while China and the Eurozone face significant risks due to slowdowns, policy challenges, and inflation persistence. Inflation remains elevated above targets, allowing central banks like the Fed and ECB to pause rate hikes but not initiate cuts, with risks of recession or financial instability if inflation persists or new supply shocks occur.

Argentina's Political and Economic Situation

• Political uncertainty persists following Javier Milei's surprise victory in primary elections, with narrow vote gaps among candidates. Inflation is projected to reach 200% in 2023 and 155% in 2024, accelerated by exchange rate depreciation and price adjustments. Economic activity is expected to contract, with GDP forecast at -3.5% in 2023 and -2.5% in 2024, worsened by high inflation, depleted reserves, and increased fiscal and monetary issuance to support the treasury.

Fiscal and Monetary Policies

• Fiscal deficit is worsening, with primary deficit estimated at -2.8% of GDP for 2023 due to increased expenditure, and fiscal adjustments planned for 2024. Monetary policy involves high interest rates (up to 138% by December 2023) to combat inflation, but further depreciation and inflationary pressures are expected. Exchange rate interventions have mixed effects, with recent devaluation boosting inflation and necessitating potential stabilization in the new year.

External Sector and Forecasts

• External accounts are improving in 2024 due to real depreciation of the peso, agricultural recovery, and energy trade surplus, reversing the 2023 deficit. However, immediate risks include high inflation, fiscal imbalances, and potential hard-landing impacts. Macroeconomic indicators project: GDP growth at -3.5% (2023), 200% inflation (2023), exchange rate exceeding 630 ARS/USD by December 2023, and monetary policy rates creeping higher.

Risks and Uncertainties

• Major risks include potential recessions in China due to hard-landing, inflation persistence leading to financial stress, geopolitical tensions, and US-China rivalry. High inflation and labor market informality exacerbate socioeconomic conditions, while fiscal mismanagement and exchange rate volatility compound economic challenges.

Note: Forecasts based on BBVA Research data are subject to change.