Market Expectations Survey (REM), July 2023

This report, published on August 15, 2023, discloses the results of the survey conducted from July 27 to July 31, 2023. It includes estimates from 37 analysts, 24 of which are local and international consultants and research centers, and 13 are financial institutions from Argentina.

It should be noted that the analysts surveyed at the end of July produced forecasts on last August 14, when the BCRA had not yet readjusted the interest rates of monetary policy instruments in line with the adjusted official exchange rate.

By July 2023, the median forecasts pointed to a monthly inflation of 7%, while the actual inflation turned out to be 6.3% (0.7 p.p. lower than that predicted by the REM). In the seventh survey of the year, analysts estimated a monthly inflation of 7.9% for August 2023 and of 140.7% y.o.y. (down 1.7 p.p. against the survey for July). Top-10 analysts forecasted a promissory inflation rate of 7.1% for July 2023, and of 140.9% y.o.y. Regarding the Core CPI, the REM participants forecasted 142.2% y.o.y. for 2023.

The outcome of the end-July survey pointed to a decrease of 2.8% y.o.y. in the real Gross Domestic Product (GDP) for 2023. However, they improved 0.2p.p. against the previous survey. However, the most optimistic analysts forecasted a drop of 2.4%, on average, in the GDP for 2023, and a new average fall of 0.8% y.o.y. for 2024.

Moreover, the survey revealed that unemployment would have a share of 7.2% in the economically active population in the second quarter of 2023, while top-10 analysts forecasted a 7% unemployment rate in the same period. Analysts at large expected that the unemployment rate would rise to 7.3% in the last quarter of 2023 and to 7.7% in the last quarter of 2024.

By August 2023, REM analysts forecasted that the BADLAR rate at private banks would be 92.5%, which is close to the average interest rate of July 2023 (92.6%), and to the 7.7% monthly rate. They expected that the interest rate would increase to 97% in December 2023, then falling to 84.6% over the next 12 months (July 2024). In addition, the most propitious forecasts in the short term revealed that this variable would, on average, rise to 92.9% in August 2023.

The nominal exchange rate was expected to be at ARS286.1/USD1 on average in August 2023 (an expected monthly variation of 7.4%) and to post an average monthly increase of around 7.5% until November 2023. The pace of depreciation is expected to speed up between December 2023 and January 2024, while the wholesale dollar price was forecasted to reach ARS499.1/USD1 by January 2024. The most accurate forecasters of this variable projected an average nominal exchange rate of ARS286.3/USD1 for August 2023.

As regards FOB exports, REM analysts predicted that they would reach USD69,366 million for 2023, exceeding the forecast of the top-10 members that projected an amount of USD67,691 million. As for CIF imports for 2023, the REM analysts at large forecasted that they would stand around USD71,657 million, while the top-10 participants estimated that they would reach USD72,588 million. Thus, both exports and imports would fall, 21.6% and 12.1%, respectively, for 2023.

Finally, REM analysts projected that the primary fiscal deficit of the non-financial national public sector would stand at ARS4,144 billion for 2023 and at ARS 3,050 billion for 2024. The average projections made by the top-10 forecasters on this variable revealed a deficit of ARS3,790 billion for 2023.

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August 15, 2023