阿根廷經(jīng)濟展望-英

ArgentinaEconomicOutlookOctober

2023BBVA

Research

/

Argentina

EconomicOutlook

–October

20232Mainmessages.

GlobalThe

global

economy

is

slowing

downatdifferent

paces

acrossregions.

Still,even

though

ratetightening

cycles

seem

tobe

over,persistent

inflation

amid

tightlabor

markets

paved

thewayfor

theFedand

the

ECBtomaintain

ahawkish

tone,

whileleaving

doors

open

for

further

hikes,

ifinflationprovestobe

more

persistent

than

expected.RecentdevelopmentsAsoft-landing

isexpected,

withglobal

growth

declining

from

3.5%

in2021

to

2.9%

in2023

and

3.0%in2024.

Inthe

US,resilient

domestic

demand

paves

thewayfor

higher

growth

forecasts

and

makesarecession

unlikely.InChina,

growth

prospects

deteriorated

significantly

and

risks

augmented,

butexpansionary

measures

are

expected

tosupport

confidence

and

prevent

ahard-landing.

IntheEurozone,

atimid

GDPexpansion,

slightlybelow

previous

forecasts,

isnow

anticipated.GrowthoutlookInflation

islikely

to

continue

slowing

ahead,

allowing

the

Fedand

theECBtoskipfurther

ratehikesoverthenextfew

months.

Still,itwillcontinue

above

targets,and

upward

riskswill

remain

alive,making

ratecutsunlikely

intheshort-run

and

favoring

areduction

of

central

bank

balances.Inflation

andrates

outlookRecession

and

financial

instability

episodes

drivenby

persistent

inflation

(onsecond-round

effects,higher

oil

prices,etc)and

contractionary

monetary

policy

are

stillpossible.Asharper

deceleration

ofChina,

geopolitical

tensions

and

USpresidential

elections

are

alsoasource

of

risks.RisksBBVA

Research

/

Argentina

EconomicOutlook

–October

20233Mainmessages.

ArgentinaThe

most

votedcandidate

intheprimary

elections

wasJavierMileiof

“LaLibertad

Avanza”,whohad

been

placed3rd

inthe

polls.This

surprising

result

leaves

thegeneral

elections

onOctober

22wideopen,

inviewof

thesmall

differences

between

the3main

parties

and

the

flow

ofnew

votesexpected

giventhe

high

abstention

rateintheprimaries.PoliticaloutlookThe

need

tohalt

thefall

inreservesledtheBCRAto

force

a22%

jump

intheFX

rateon

theMonday

after

theprimaries.

The

government

announced

that

it

willmaintain

thisnew

parity(ARS/USD

350)

until

October,

but

theimmediate

pass-through

toprices

has

already

eliminatedthe"gain"

inexchange

ratecompetitiveness,

sowe

expectfurther

depreciations

toleavethe

FXrateinDec-23

at

ARS/USD

630

(monthly

average).ExchangemarketInflation

should

then

reach

200%

in2023,

with

monthly

increases

above

single

digitsinthelastfourmonths.

Inflation

will

remain

elevated

during

the

first

months

of2024

as

correctionsinregulatedprices

and

theFXrateare

expected

from

Dec-23.

Itwouldonly

starttodecelerate

in2H24,accumulating

155%

intheyear(iftheincoming

government

pursues

a

successful

stabilization

plan).InflationThe

latesteconomic

activitydata

werebetter

than

expected,

but

theexchange

ratejump

inAugustand

soaring

inflation

willdeteriorateeconomic

conditions

in2H23.We

maintain

the3.5%

GDPdecline

forecast

for

2023

and

worsenthe

contraction

forecast

for

2024

to2.5%.EconomicactivityBBVA

Research

/

Argentina

EconomicOutlook

–October

20234Mainmessages.

ArgentinaAfter

the

PASO,the

government

pushed

through

apackage

of

measures

that

increased

primaryexpenditure

above

ourpre-election

spending

accelerationforecasts,

sowe

are

revisingour

primaryfiscal

deficit

estimate

upward

from

2.6%

to2.8%

of

GDP.Next

yearthe

government

willimplementafiscal

adjustment

and

theprimary

deficit

would

beclose

to1%

ofGDP.FiscalResultGiventhisincrease

infiscal

deficit,

we

expectmonetary

issuance

tocontinue

accelerating

for

therestof

theyear,accentuating

the

current

FXrateand

inflationary

pressures

intheeconomy.Directmonetary

issuanceto

assist

thetreasury

and

indirect

monetary

issuance

(viaBCRAbondpurchases

inthe

secondary

market)

willexceed

4%

of

GDPin2023

(up0.5p.p.

comparedto

2022).MonetarysectorGood

prospects

for

theexternal

accounts

in2024.

The

tradebalance

willimprovein2024

due

tothereal

depreciation

ofthe

peso,

due

tothe

recoveryof

agriculture,

once

the

post-drought

situationhas

normalized,

and

due

totheexpected

good

performance

of

theenergy

sector,

whichisexpectedtoachieve

anenergy

trade

surplus.

This

will

reversethetrade

deficit

of

2023

and

significantlyreduce

thecurrent

account

deficit.Externalsector01GlobalEconomicOutlookOctober

2023BBVA

Research

/

Argentina

EconomicOutlook

–October

20236Global

growth

islikely

tosoftlandwhile

monetary

policy

will

remainrestrictive

foralonger

thanusualperiodtohelpinflation

easetowards

targetsBBVA

RESEARCH

BASELINE

SCENARIO:

GDPGROWTH,INFLATION

AND

POLICYINTERESTRATES

(*)(GDPGROWTH:

%,INFLATION:

YOY

%,EOP,POLICYINTERESTRATES:%,EOP)Monetary

tighteningcycleGlobal

growth:from

3.5%

in2022

to2.9%

(+0.0pp)

in2023and

3.0%(+0.1pp)in

2024Inflationwill

remainhigh,but

willtrend

down

asdemand

weakensand

givennoextra

supplyshocksislikely

overinthe

USandthe

EZ,

but

ratecuts

are

notaround

thecorner(*)

In

the

caseof

the

Eurozone,

interest

rates

on

refinancing

operations.Source:

BBVA

Research

based

onBloomberg

data.BBVA

Research

/

Argentina

EconomicOutlook

–October

20237US:growth

resiliencesignsmakearecession

unlikely

ahead,postponing

theprospectsforthebeginning

oftheeasingcycle

to

mid-2024US:GDPGROWTH(%)GDPforecasts

revised

up

onrobust

domesticdemand:

solid

consumption

and

resilientinvestment

(boosted

by

housing

marketrecovery

as

well

as

IRAand

CHIPSacts).Inflation

expected

to

reach

2.9%

inDec/23

and2.4%

inDec/24;

upside

risks

are

still

relevant.Fed:

inflation

improvement

will

prevent

extrarate

rises

(but

ahike

isstill

possible

in

4Q23);an

easing

cyclefrom

Jun/24

islikely

to

takerates

to

4.75%

inDec/24.Risks:

arecession

orfinancial

stress

on

tightmonetary

conditions

and

persistent

inflation,presidential

elections.(f):

forecast.Source:

BBVA

ResearchBBVA

Research

/

Argentina

EconomicOutlook

–October

20238China:

prospects

deterioratedsignificantly

andrisksincreasedgivenincreasingstructuralchallenges,butagradualgrowth

slowdown

isstilllikelyCHINA:

GDPGROWTH(%)Generalized

deceleration

on

weak

confidence,real

estate

crunch,

2021

“regulatory

storms”

andglobal

slowdown.Still,

the

most

likely

scenario

is

that

furthertargeted

monetary,

fiscal

and

regulatorymeasures

sustain

growthand

driveinflation

up.Although

asoft-landing

isstill

expected,

GDPforecasts

have

been

revised

down

on

incomingdata

and

acostly

(but

controlled)

addressing

ofreal

estate

imbalances.Structural

challenges:

balance-sheet

recessionand

deflation,

US-Chinaconfrontation,

middle-income

trap,

unfavorable

demographics,

etc.(f):

forecast.Source:

BBVA

ResearchBBVA

Research

/

Argentina

EconomicOutlook

–October

20239Eurozone:persistentinflation,

despite

weaker

GDPgrowth,

islikelytoforcetheECBtomaintainpolicy

ratesatrestrictive

levels

for

longEUROZONE:GDPGROWTH(%)Growth

revised

downon

incoming

data

amid

adeceleration

of

China,

whose

effects

will

bemostly

offset

byhigher

USgrowth.Fiscal

policy

isstill

supportive,

but

will

likelybecome

more

targeted

and

less

expansionaryonwards.Averageinflation

forecasts

revised

up:

5.7%

in2023,

3.0%

in2024

onservice

stickiness,rebound

inoilprices.ECB:rates

are

likely

to

remain

at

current

levelsuntil

Dec/24;

increasing

focus

onliquidityreduction

measures.Risks:

higher

energy

prices,

more

persistentinflation,

stagflation,

China’sdeceleration.(f):

forecast.Source:

BBVA

ResearchBBVA

Research

/

Argentina

EconomicOutlook

–October

202310Risks:

thesoft-landing

scenario

could

bepotentially

derailedbyproblemsinChina

andtheeffectsofthestillhighinflation

andinterestratesMAIN

RISKSMAIN

UNCERTAINTIESRecession

andfinancialstressontightmonetaryconditions?

mainly

under

more

persistent

inflation

(onlabortightness,

second-round

effects,

higher

energyprices,etc.)?

Geopoliticalandpolitical

tensions?

US-Chinarivalryanddeglobalization?

Climate

changeandenergy

transition?

SocialtensionsandpopulismAhard-landing

in

China?

due

toreal

estate

problems,

low

confidence,US-China

confrontation,

deflation,

etc.?

potential

financial

spillovers02ArgentinaEconomic

OutlookOctober

2023BBVA

Research

/

Argentina

Economic

Outlook

–October

202312Neitherthepolls

nor

theresultsintheprovincial

elections

anticipatedtheresultsofthe

primaryelections...POLLSVS.PASO*

ELECTIONRESULTSPROVINCIAL

ELECTIONSAND

PRESIDENTIAL

PASO*GOVERNORSPRESIDENT

(PASO)Unión

porlaPatriaUnión

porlaPatria(PASO)Juntos

porelCambioJuntos

porelCambio(PASO)La

Libertad

AvanzaFuerza

provincialDistrict

withno

election*PASO:primary,

open,

simultaneous

andcompulsory

elections

(Primarias,

Abiertas,

SimultáneasyObligatorias).*PASO:primary,

open,

simultaneous

andcompulsory

elections

(Primarias,

Abiertas,

SimultáneasyObligatorias).Source:

Ministry

of

the

Interior

andBBVA

Research.Source:

Ministry

of

the

Interior,

Provincialelectoral

chambers

andBBVA

Research.The

polls

underestimated

theintention

tovotefor

JavierMileiby

more

than

11pp.

Inthe

elections

held

at

provincial

levelbefore

thePASO

onAugust

13(46%

oftheelectoral

roll)

therepresentatives

ofthelibertarian

platform

represented

only

3.8%of

thetotal

number

ofvoters.BBVA

Research

/

Argentina

Economic

Outlook

–October

202313…which

haslefttheelectoraloutcomeopenandincreased

uncertainty…PROVINCIAL

ELECTIONS2019

AND

2023ELECTORAL

TURNOUT(NUMBER

OFVOTERS)(ASA%

OFTHE

ELECTORAL

ROLL)Source:

Ministry

of

the

Interior

andBBVA

Research.Source:

Ministry

of

the

Interior

andBBVA

Research.The

difference

in

votes

between

thethree

candidates

is

narrow.

The

final

result

remains

uncertain

since

there

could

be

between2and

4

million

new

voters

in

thegeneral

elections

who

didnot

vote

in

theprimaries,

to

which

must

be

added

thedistributionof

votesfrom

parties

thatdid

notreach

theminimum

thresholdof

1.5%

of

votes

in

that

instance

(about

745

thousand

votes).BBVA

Research

/

Argentina

Economic

Outlook

–October

202314…inan

already

deterioratedeconomicscenario,with

depletedreserves

andaccelerating

monetaryissuance

toassist

theTreasuryNETINTERNATIONAL

RESERVESMONEYISSUED

TOSUPPORTTHENATIONAL(MILLIONSOF

USD)TREASURY(%GDP)Source:

BBVA

Research,

IMF

andBCRA.Source:

BBVA

Research,

IMF

andBCRA.Net

international

reserveshave

been

innegativeterritory

sincethe

beginning

of

theyear.This

low

level

of

reserves,togetherwithhighmonetary

issuance

toassist

theTreasury

(whichhas

accelerated

even

further

since

June),

creates

acombinationthat

generates

continuous

and

growingexchange

rateand

inflationary

pressures.BBVA

Research

/

Argentina

Economic

Outlook

–October

202315After

theprimaryelections,the

officialexchangerate

jumped(theparallelratesalsoreacted

inthesameway)TRENDSINDIFFERENTEXCHANGE

RATES

(ARS/USD)HIGH-FREQUENCYINFLATION

INDICATORS(WEEKLY

%CHANGEAND

4-WEEK

ROLLINGAVERAGE)16%14%12%10%8%8,2%6%4%2%0%Weekly4-week

rollingavg.Source:

BBVA

Research

and

BCRA.Source:

SEIDO/Alphacast

and

BBVA

Research.The

27%

devaluationduring

August

wasagreed

withthe

IMF

inorder

to

increase

reserves,but

thelackofaplan

toanchorexpectations,

together

with

the

electoral

uncertainty,

alsoboosted

parallel

exchange

rates

(thegapdid

not

narrow)and

pricesreacted

strongly.

The

Government

stated

that

itwould

keep

theexchange

rateat

350

until

the

end

of

October.BBVA

Research

/

Argentina

Economic

Outlook

–October

202316…butthe

exchange

ratecorrection

hasbeenquicklydiluted

by

therapidpass-throughtopricesREAL

EXCHANGE

RATE:

OFFICIAL

VS.PARALLEL(ARS/USD,

ATCONSTANTPRICES

FROM02/OCT/23)Source:

INDEC,

BCRA

and

BBVA

Research.Inorder

tocontain

theinflation

caused

by

the

exchange

rateadjustment

after

theprimary

elections,

theBCRAhalted

theexchange

ratesincethen,

quickly"erasing"

inreal

terms

theeffect

of

thedepreciation.

Therefore,

we

expect

anew

exchangeratejump

after

October

elections

and

an

additional

adjustment

inDecember

implemented

by

the

new

government.BBVA

Research

/

Argentina

EconomicOutlook

–October

202317The

IMFapproved

anewdisbursementinAugust,

andthenextreview

willtake

placeinNovemberMONTHLY

DEBTOBLIGATIONS

WITHTHEIMF(MILLIONSOF

USD)The

Government

reached

anwiththe

IMF,forwhichadisbursement

of

USD

7.3

billionwasmade

last

August.This

amount

issufficient

to

coverpayments

tothe

IMF

between

July

and

November,

themonth

inwhichthe

nexttarget

reviewisdue

totake

place.The

nextdiscussion

with

the

multilateralorganization

will

probably

take

place

with

thenew

president

of

Argentina.Therefore,

anew

recalibration

of

the

program(whichtoday

the

government

isagain

failing

tocomply

with)isexpected

inDecember.Source:

BCRA,

IMF

and

BBVA

Research.BBVA

Research

/

Argentina

EconomicOutlook

–October

202318The

fiscaldeficitperspectives

deterioratedafterthePASO

duetonewspending

measures,

makingthenecessary

adjustmentmoredifficultfor2024CUMULATIVE

PRIMARY

FISCAL

RESULT(%GDP)Tax

revenues

were

negatively

affected

by

thedrought,

but

marginally

increased

due

to

thePAIStax

(broadening

of

the

taxablebase)

andVAT

(defensive

consumption

inthe

face

ofuncertainty).The

adjustment

inexpenditure

in2023

is

dueto

the

reduction

of

social

expenditure

and

thereduction

ofsubsidies.

However,

the

electoralmeasures

recently

implemented

by

thegovernment

will

haveafiscal

cost

of1%ofGDP.The

government

continues

to

announceexpansionary

policies

that

further

deterioratethe

result

that

will

end

at-2.8%

of

GDP.For

2024

we

forecast

adeficit

of1%of

GDP.We

expect

that

afiscal

adjustment

during

thefirst

yearof

the

nextadministration

(whoeverwins

the

election)

will

beunavoidable.Source:

Ministry

of

Economyand

BBVA

Research.BBVA

Research

/

Argentina

EconomicOutlook

–October

202319As

aconsequence,

we

areraisingour

inflation

forecast

to200%

by2023and155%by2024INFLATION

OBSERVED

AND

EXPECTED

BYBBVAAND

THEMARKET

CONSENSUS(Y/YCHANGE%)The

August

devaluation,

since

it

was

not

partof

acomprehensive

plan,

will

only

acceleratethe

economy's

inflation

levelduring

the

secondhalf

of

the

year.We

expect

double-digit

average

monthlyinflation

for

the

remainder

of

the

year.We

anticipate

that

the

exchange

rate

will

moveagain

post-election

and

then

afurthercorrection

inDecember.

This

will

accelerateprices

inNovember

and

December

2023.In

addition,

relative

price

corrections

areexpected

to

keep

inflation

high

in1H24.The

government

that

takes

office

will

probablylaunch

astabilization

plan,

but

its

effects

willnot

be

felt

until

the

second

half

of2024.Source:

BBVA

Research

and

BCRA.BBVA

Research

/

Argentina

EconomicOutlook

–October

202320Against

this

backdropofhigh

inflation

fortherestofthe

year,

we

projectseveral

consecutive

interest

rate

hikesuntil

DecemberMONTHLY

INFLATION

AND

EFFECTIVEMONTHLYINTERESTRATE

OF

THELELIQ

(%)We

forecast

that

the

LELIQ

interest

rate

willgradually

rise

to

138%

inDecember,

inthecontext

of

inflation

averaging

double

digits

permonth,

whichwill

force

the

BCRAto

takecontainment

actions.In

any

case,

we

believeit

will

beverydifficultfor

the

interest

rate

to

offset

the

priceacceleration

expected

for

4Q23

and

the

firsthalf

of

2024.From

mid-2024

onwards,

ifthe

governmentintends

to

embark

onastabilization

plan,

it

willlikely

seek

to

foster

apositive

real

interest

rateenvironment

to

lowerinflation.BBVA

Research's

September

inflation

forecast.Source:

BBVA

Research,

INDEC

andBCRA.BBVA

Research

/

Argentina

Economic

Outlook

–October

202321Highinflation

andtheinformality

ofthelabormarket

causedagreatdeteriorationinthesocioeconomicconditions...WAGES,

BASIC

FOOD

BASKETS

AND

INFLATIONFORMAL

AND

INFORMAL

EMPLOYMENT(CUMULATIVE%CHG.YTD,JULY

2023)(%OFTHE

TOTAL

LABORFORCE)BFB:BasicFood

Basket(Indigence

Line).TFB:Total

Food

Basket(Poverty

Line).Source:

INDEC

andBBVA

Research.Source:

INDEC

andBBVA

Research.The

acceleration

of

inflation

is

increasingly

eroding

incomes,

further

damaging

thesituation

of

themost

vulnerable

sectors.

Theproportionof

informal

workers

rose

again

in

2Q23

and

continuesits

upward

trend,

contrary

to

thesituationof

formal

workers,

whohave

greater

protection

against

theloss

of

their

real

wages.BBVA

Research

/

Argentina

Economic

Outlook

–October

202322…which,

together

with

thedrought

andimportrestrictions,negatively

affectactivity

andpunish

(due

tocarry-over)

growth

in2024ECONOMICACTIVITY

AND

EXPENDITUREINFUELGROSSDOMESTICPRODUCTWITHBBVACARDS(ACTIVITY

BASED

ON100=2004;CONSUMPTION

INQUANTITIES)(%YOY)Source:

INDEC

andBBVA

Research.Source:

INDEC

andBBVA

Research.Although

activity

performed

better

than

expected

in

thefirst

half

of

theyear,

the

severity

of

thedroughtpushed

it

into

negativeterritory

(-1.9%

YtD

accum.).

Recent

sectoral

indicators

show

recessionary

signs

for

thesecond

half

of

theyear.

We

maintain

the2023

GDP

decline

forecast

at

-3.5%and

modify

the2024

forecast

from

-2%to

-2.5%.BBVA

Research

/

Argentina

Economic

Outlook

–October

202323During2023,

theexternal

sector

accumulatedimbalances,bothontheexportandimportsidesCEREALS

AND

OILSEEDS

EXPORTS(MILLIONSOF

USD)IMPORTERS‘COMMERCIAL

DEBT(GOODSANDSERVICES)(MILLIONSOFUSD)Source:

CIARACEC

and

BBVA

Research.Source:

INDEC,

BCRA

and

BBVA

Research.Increasing

restrictionson

accesstothe

official

exchange

market

due

tolowerliquidation

of

exports

(asaresult

of

thedrought)accelerated

the

accumulation

of

importers'commercial

debt.BBVA

Research

/

Argentina

Economic

Outlook

–October

202324In2024,

thegoodoutlook

foragriculturalexportsandthe

energy

tradebalancewill

improve

theexternal

accountsofArgentinaAGRICULTURAL

EXPORTS:

MAIN

PRODUCTSTRADE

BALANCE

OF

THEENERGYSECTOR(BILLIONSOF

USD)(MILLIONSOF

USD)Source:

USDA,

Rosario

Stock

Exchange

andBBVA

Research.Source:

INDEC,

Ministry

of

Energy

andBBVA

Research.Everything

indicates

that

thedrought

will

be

reversed

in

2024

and

this

will

increase

theexportable

supply

of

theagricultural

sector.With

theopening

of

thegas

pipeline

and

progress

in

other

infrastructure

works,

it

will

not

only

be

possible

to

replace

energyimports

butalso

to

increase

oil

exports

and

reach

a

trade

surplus

in

theenergy

balance

in

2024.BBVA

Research

/

Argentina

EconomicOutlook

–October

202325Table

ofMacroeconomicForecasts2020202120222023e2024eGDP

(%

y/y)-9.936.182.637.1-12.2-2.010.750.9101.936.710.46.35.094.8172.975.09.7-3.52006301380.3-2.5155Inflation

(%

y/y,EOP)ExchangeRate(vs.USD

eop,

Dec.

avg.)Monetary

policy

rate

(%

EOP)Privateconsumption

(%

y/y)Public

consumption

(%

y/y)Investment

(%

y/y)1,49360-3.4-5.311.7-1.0-3.3-1.190.71.92.5-13.1-6.433.8-3.011.1-2.4-4.2-0.785.00.4Primary

FiscalResult(%

GDP)Financial

FiscalResult

(%

of

GDP)Current

account

(%

GDP)Public

Debt(%

GDP)-2.8-4.7-3.5114.8-8.4-4.50.71.4103.880.6Source:

BBVA

Research.BBVA

Research

/