The Argentine economy will only deteriorate over the remainder of the Fernandez Presidency: forecasts for 2022 and 2023
Even assuming that the government is able to comply with the fiscal and monetary targets set in the EFF program negotiated with the IMF (a primary fiscal deficit around 2.5% of GDP and monetary financing of the Treasury by 1% of GDP in 2022; and 1.9% of GDP and 0.6% of GDP for those parameters, respectively, in 2023), it is already very clear that the target for foreign reserve accumulation will not be met. On the contrary, since the end of June 2022, there has been a dangerous trend toward the exhaustion of reserves.
Our optimistic scenario, which assumes that the government may avoid a sharp devaluation, depicts annual inflation around 100% (i.e., 6% average monthly inflation) and the rate of growth of the economy converging to 0% over 2023.
The pessimistic scenario, which includes a 100% increase in the price of the dollar in the official market at the beginning of 2023, depicts annual inflation escalating above 170% and a significant decline in GDP in 2023. Depending on the political and social circumstances, inflation could escalate to 800% if conditions were as negative as those that followed the “Rodrigazo” in June 1975. In any case, the decline in GDP would be at least -2%, the decline that followed the reunification of the exchange market in December 2015.
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