Diego Pereira, JPMorgan’s (JPM) chief economist for the Southern Cone, said Argentina had made progress in three critical areas since Sergio Massa took office as economy minister in August:
in relation to the International Monetary Fund (IMF),
in public spending, and
in the accumulation of international reserves
However, the U.S. Bank expert pointed out that a “stabilization plan” was lacking, while he predicted economic contraction and accelerating inflation in the country by 2023.
“The leadership role that Massa has assumed as a minister and a political spokesman has been important,” the analyst said in an interview with Bloomberg Linea.
In this sense, he stressed that the presidential appointee, Alberto Fernández, who replaced Silvina Batakis, managed to “avoid a tense situation with the IMF, ensuring a new vote of confidence.”
This led to another disbursement to prevent Argentina from defaulting on its obligations to the multilateral lending organization.
Pereira also underscored Massa’s efficiency in “containing spending, which, together with rising inflation, increases the likelihood of achieving the annual target of a primary deficit of 2.5% of GDP.”
Regarding the “soy dollar,” the expert noted that this exchange rate measure has allowed the Central Bank of Argentina (BCRA) to “accumulate reserves after months of decline.”
Yes, but… The expert also considered that “given the current imbalances, the absence of a stabilization plan means that policy efforts are incomplete concerning inflation and the exchange rate gap, which remains above 100%.”
PROJECTIONS FOR 2023
For Diego Pereira, the measures taken by Sergio Massa will not be enough to prevent Argentina’s GDP from contracting in 2023, while the analyst also expects inflation to accelerate.
“In our baseline scenario, inflation would be close to 100% this year and reach 112% next year,” he said.
He said, “As for economic activity, we expect +4.1% this year, but we think a -0.6% decline in GDP is more likely next year.
With information from Bloomberg in linea