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 July 7, 2023, disseminates the results of the survey carried out between June 28 and 30, 2023. Forecasts from 39 participants were considered, including 26 local and international consulting firms and research centers and 13 financial institutions in Argentina.

In the current survey, REM analysts project a level of real Gross Domestic Product (GDP) for 2023 lower than in 2022 by 3.0%. Meanwhile, those who best forecast this variable in the past (TOP-10) project, on average, a reduction of 2.3% in the year. For 2024, all REM participants estimate a new average annual contraction of 0.6%.

On this occasion, those who participate in the REM estimated a monthly inflation of 7.3% for June 2023, a more contained evolution than in the last month, after an overestimation of 1.2 p.p. in the previous REM compared to the May data. However, as last month, after REM participants provided their forecasts to the BCRA, new information was released that suggests that monthly inflation moderated even more with respect to the data observed in May. Both the various indicators of high frequency of wholesale and retail prices monitored by the BCRA and the CPI of the Autonomous City of Buenos Aires already published (7.1% general increase and 6.1% in goods, during June) suggest a greater reduction in monthly inflation than predicted by REM analysts.

Meanwhile, REM analysts estimated inflation of 142.4% YoY for the whole year, breaking the upward trend previously observed. In turn, they revised the forecasts for 2024 and 2025, placing inflation at 105.0% YoY and 54.8% YoY, respectively. Regarding the Core CPI, REM participants also revised their forecasts downwards for 2023, placing it at 141.0% YoY, and for 2024, at 103.8% YoY. For the 2025 annual period, they projected core inflation of 53.5% y.o.y.

For July 2023, REM participants forecast a BADLAR rate of private banks of 92.50%, similar to the average rate recorded during the month of June 2023 (92.45%). Those who best forecast the rate in the short term predict, on average, that it will stand at 92.44% in the month of July.

REM analysts forecast the average nominal exchange rate of $267.07 per dollar for July 2023 (7.4% expected monthly variation) and those who more accurately forecast this variable in the short term projected that the average nominal exchange rate for the same period will be $267.20/US$ (7.4% monthly variation compared to June’s data).

As for the value of exports (FOB), those who participate in the REM estimate an amount, for 2023, of US$ 70,394 million, higher than the forecast of the members of the TOP-10, who projected the value of exports at US$ 68,267 million. As for imports (CIF) for the year 2023, the projections for the set of REM participants stood at US$ 71,526 million, while the members of the TOP-10 estimated them at US$ 71,903 million. Thus, the participants of the REM contemplate, for the year 2023, a year-on-year drop of 20.4% in the value of exports and 12.3% for imports.

Those who participate in the REM estimate that in the second quarter of 2023 there would have been an unemployment level of 7.1% 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 expects the unemployment rate to rise during the rest of the year to 7.4% for the last quarter of 2023.

Finally, the projection of the nominal primary fiscal deficit of the National Non-Financial Public Sector (NFPS) made by the participants stood at $4,355 billion for 2023 and $3,500 billion for 2024. The average of the 10 most accurate forecasters over the past year for this variable expects a deficit of $ 4,104 billion for 2023.