Title: Argentina‘s Economic Outlook: BCRA‘s REM Report Predicts Dolarization and Inflation Slowdown
In a recent report, the Central Bank of Argentina (BCRA) released the Relevamiento de Expectativas de Mercado (REM), a valuable insights into Argentina’s future economic trajectory. Compiled from projections of 42 analysts, consultancy firms, research institutions, and financial entities, this quarterly report [1] sheds light on key variables such as exchange rates, inflation, GDP growth, and trade balance, spanning the short and medium term.
Exchange Rate Forecasts
By January 2025, exchange rate expectations suggest a strong peso, with analysts predicting an average of $1.042 per U.S. dollar. On a month-over-month basis, this represents a 2.1% increase compared to December 2024 predictions. Looking ahead, the dollar is projected to stand at $1.205 by December 2025, marking an 18.1% increase year-over-year, with a gradual monthly rise of 1.4% [2].
The Top 10 analysts, considered the most influential, maintain similar projections, anticipating an exchange rate of $1.043 in January 2025. By December 2026, predictions indicate a 14.7% yearly rise in the nominal exchange rate.
Inflation and Prices
Towards the end of 2024, inflation is expected to decelerate 2.7%, according to the REM survey, 0.2 points lower than the previous report. This pace would bring inflation to 117.8% on an annual basis, a slight decrease from the previously published estimate.
Core inflation, which ignores goods and services with regulated prices or seasonal effects, is projected to accelerate 2.6% in December 2024, closing the year at a 104.3% annual rate.
By 2025, inflation is expected to ease significantly, with projections indicating 25.9% inflation on an annual basis. Stable prices will extend into the following year, with annual inflation Flat to reach 15.3% and 10% by 2026 and 2027, respectively.
The Quarterly Inflation Report highlights the BCRA’s commitment to maintaining transparent and comprehensive communication with the market, a crucial step towards instilling confidence in the economy.
GDP Growth
The REM report poll restantes an economy 2.6% smaller in 2024 compared to the preceding year, although optimism for restoration in Q4 hints at a 0.9% quarterly GDP increase when adjusted for seasonal influences.
Promising growth prospects of 4.5% emerge for 2025, although the Top 10’s lower estimation of 3.8% hints at potential obstacles to this target. Long-term projections predict growth of 3.7% and 3% in 2026 and 2027, respectively.
Interest Rates and Unemployment
With a shift in interest rate measurement to the Tasa Mayorista Argentina (TAMAR), the REM expects an average rate of 34% annually in January 2025, equal to an effective monthly rate of 2.8%. By the end of 2025, projections anticipate a decline to 25%, with a subsequent reduction to 16.87% by late 2026.
Unemployment rates, meanwhile, are anticipated to decrease steadily. Following a Q4 2024 projection of 7.2% (indicating a 0.8 points drop from the previous report), unemployment is set to continue this downward trend, settling at 7% and 6.9% in 2025 and 2026, respectively.
Trade Balance
The BCRA’s REM survey forecasts exports totaling USD 78,910 million and imports totaling USD 60,593 million in 2024, leaving a USD 18,317 million surplus. In 2025, export earnings are projected at USD 82,818 million and imports at USD 67,449 million, translating into a USD 15,369 million balance.
Looking ahead to 2026, Argentina’s trade surplus is expected to reach USD 15,940 million, with exports projected at USD 89 billion and imports at USD 73,060 million.
Public Finances
A primus inter pares Moody’s rating and Brazil’s debut in the G20 are the most influential factors shaping Argentina’s fiscal prospects for 2025. The REM report projects a primary surplus for the non-financial public sector (NFSP) of $11.2 trillion, while the Top 10 analysts forecast a higher $11.8 billion.
By 2026, projections for the government’s primary balance are expected to reach a substantial $14.2 billion surplus.
This REM report stands as a reflection of Argentina’s economic trajectory, providing valuable insights into its expected exchange rate, inflation, GDP growth, unemployment, trade balance, and fiscal situation in the coming years.
