Market Expectations Survey (REM)

The Market Expectations Survey (REM) consists of a systematic monitoring of the main short- and medium-term macroeconomic forecasts usually made by local and foreign specialists on the evolution of selected variables of the Argentine economy compiled by the Central Bank of the Argentine Republic (BCRA). It should be noted that the forecasts made in this report do not constitute projections of the BCRA.

This report, published on August 15, 2023, disseminates the results of the survey carried out between July 27 and 31, 2023. Forecasts from 37 participants were considered, including 24 local and international consulting firms and research centers and 13 financial institutions from Argentina.

It should be noted that those who participated in the REM survey at the end of July provided their forecasts prior to the BCRA readjusting the level of interest rates of monetary regulation instruments on August 14, in line with the recalibration of the level of the official exchange rate.

For July 2023, the median estimate of those who participated in the REM survey suggested inflation of 7.0% per month, while the data observed in that month turned out to be 6.3% (0.7 percentage points —p.p.— lower than forecast by the REM). In the seventh survey of the year, analysts estimated monthly inflation of 7.9% for Aug-23 and inflation for the whole year of 140.7% y.o.y. (1.7 p.p. less than the previous survey). Those who best forecast this variable in the past (TOP-10) expected inflation of 7.1% for Jul-23, and 140.9% y.o.y. for 2023. Regarding the Core CPI, REM participants placed their forecasts for 2023 at 142.2% y.o.y.

In the survey at the end of July, REM analysts projected a level of real Gross Domestic Product (GDP) for 2023 2.8% lower than in 2022, improving the outlook by 0.2 p.p. compared to the previous survey. Meanwhile, those who best forecast this variable in the past projected, on average, a reduction of 2.4% in the year. For 2024, all REM participants estimated a new average contraction of 0.8% YoY.

Those who participate in the REM estimated that in the second quarter of 2023 there would have been an unemployment level of 7.2% of the Economically Active Population (EAP). For the members of the TOP-10, the unemployment rate would have stood at 7.0% in the same period. The group of participants expected a rise in the unemployment rate to 7.3% in the last quarter of 2023 and 7.7% in the last quarter of 2024.

For August 2023, REM participants forecast a BADLAR rate of private banks of 92.5%, similar to the average interest rate recorded during the month of July 2023 (92.6%), equivalent to a monthly rate of 7.7%. REM participants expected an interest rate hike in Dec-23 to 97.0%, then falling to 84.6% for the next 12 months (Jul-24). Those who best forecast this variable in the short term predicted, on average, that it would rise to 92.9% in the month of Aug-23.

REM analysts forecast the nominal exchange rate at $286.1 per dollar for the average of August 2023 (an expected monthly variation of 7.4%) and an average monthly increase of around 7.5% until November 2023. Between Dec-23 and Jan-24, they forecast a higher rate of depreciation, projecting a wholesale dollar price of $499.1 in Jan-24. Those who have more accurately forecast this variable in the past projected that the average nominal exchange rate for Aug-23 will be $286.3/US$.

As for the value of exports (FOB), those who participate in the REM estimate an amount, for 2023, of US$69,366 million, higher than the forecast of the members of the TOP-10 who projected the value of exports at US$67,691 million. As for imports (CIF) for the year 2023, the projections for the set of REM participants stood at US$71,657 million, while the members of the TOP-10 estimated them at US$72,588 million. Thus, the participants of the REM contemplate, for the year 2023, a drop of 21.6% in the value of exports and 12.1% for imports.

Finally, the projection of the primary fiscal deficit of the National Non-Financial Public Sector (NFPS) made by REM participants stood at $4,144 billion for 2023 and $3,050 billion for 2024. The average of the 10 most accurate forecasters over the past year for this variable expects a deficit of $ 3,790 billion for 2023.