Diego Pereira, JPMorgan’s (JPM) chief economist for the Southern Cone, said Argentina had made progress in three critical areas since Sergio Massa took over 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 American Bank expert emphasized that a “stabilization plan” was missing, while predicting economic contraction and acceleration of inflation in the country until 2023.
“The leadership role that Massa has taken as minister and political spokesperson has been important,” said the analyst in an interview with Bloomberg Linea.
In this sense, he emphasized that the presidential nominee, Alberto Fernández, who replaced Silvina Batakis, managed to “avoid a tense situation with the IMF, securing 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 underlined Massa’s efficiency in “containment of expenditure, which, together with rising inflation, increases the likelihood of reaching the annual target of a primary deficit of 2.5% of GDP”.
Regarding the “soy dollar”, the expert pointed out 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 lack of a stabilization plan means that policy efforts are incomplete in relation to inflation and the exchange rate gap, which remains above 100%.”
PROJECTIONS FOR THE YEAR 2023
For Diego Pereira, the measures taken by Sergio Massa will not be enough to prevent Argentina’s GDP from shrinking in 2023, while the analyst 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, “In terms of economic activity, we expect +4.1% this year, but we think a -0.6% drop in GDP is more likely next year.
With information from Bloomberg online
