Tuesday, January 18

Without Budget 2022 and with rates and the IMF in sight: market forecasts

Specialists and investors closely follow the slow negotiations to restructure debt for about 45,000 million dollars with the IMF, amid annual inflation of over 50% and tight exchange controls.

The financial markets will have four rounds of business, since on Friday there will be inactivity on the recommendation of the central bank (BCRA) on the eve of Christmas, in a week where no one is ruled out hike in the reference rate of the monetary authority.

“It is not a good sign that the budget has not been approved,” said Ricardo Delgado, an economist at the Analytica consultancy.

“The rejection (of the budget) by Deputies may imply a counterproductive turn in the face of the IMF agreement. Regarding rates, the macroeconomic reasons for the increase include greater incentives to advance exports for the agro-export complex and higher real interest rates for deposits in the financial system, “said the consulting firm Delphos Investment.

“In itself, the budget has less and less macro relevance because for years there has been a tendency to underestimate income and expenses in order to be able to allocate the ‘unexpected’ income in a discretionary way,” said Roberto Geretto, of Fundcorp.

“When prices normalize, inflation will return above 3% per month, to which will be added the strong monetary issue that we are not yet seeing in prices, but will only be reflected in the first months of 2022. Within this context For December, we are aiming for a figure of 3.4% to 3.5%, to close the year with a floor of 50%, “said Emiliano Anselmi, an analyst at Portfolio Personal Inversiones.

“Faced with the early deviation from the official goal (29%) and the dangers of a further deterioration in purchasing power in the face of inflationary acceleration in the context of an electoral year, the central bank responded by modifying its exchange rate strategy and transformed the exchange rate official in the main nominal anchor of the economy to try to contain the rise in prices, “said the consulting firm Ecolatina.

“Inflationary convergence will be one of the most important events in 2022, since central banks, mainly those of developed countries, changed their stance regarding the temporary nature of inflation,” predicts the Balanz brokerage.

“In 2022-23, the economy is expected to face headwinds due to the accumulation of macroeconomic and financial imbalances (very high and entrenched inflation and rising exchange rate pressures driven in part by the recurring monetization of large fiscal deficits) and growing micro-distortions. and inefficient resource allocation, “Goldman Sachs estimated in a report.

“He added that” the stock of usable net international reserves is being dangerously depleted, but there is little indication that monetary, exchange and interest rate policy will shift towards a more conventional path. “