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 November report are the BCRA’s own projections.
Expectations about retail prices, the interest rate, the nominal exchange rate, exports and imports, the primary result of the national non-financial public sector, unemployment and economic activity are revealed.

This report, published on November 13, 2023, disseminates the results of the survey carried out between October 27 and 31, 2023. Forecasts from 38 participants were considered, including 25 local and international consulting firms and research centers and 13 financial institutions from Argentina.

For October 2023, the median of the estimates of those who participated in the REM survey suggested inflation of 10.0% per month, while the data observed in that month turned out to be 8.3% (1.7 percentage points —p.p.— lower than that forecast by the REM). In the tenth survey of the year, analysts estimated monthly inflation of 11.5% for November and inflation for the whole year of 185.0% y.o.y. (4.3 p.p. more than in the previous survey).

Those who best forecast this variable in the past (Top-10) expected inflation of 11.9% for November and 188.6% y.o.y. for 2023 in the end-of-October survey. Regarding the Core CPI, REM participants placed their forecasts for 2023 at 194.5% y.o.y.

In the October survey, REM analysts projected for 2023 a level of real Gross Domestic Product (GDP) 2.0% lower than the average for 2022, improving the outlook by 0.8 p.p. compared to the previous survey. This improvement is concentrated in the third quarter, a period for which participants began to estimate a quarterly GDP expansion without seasonality of 2.3% after the previous survey predicted a contraction of 0.5% for the same period.

Meanwhile, those who best predicted this variable in the past projected, on average, a reduction of 1.9% in the year. For 2024, all REM participants estimated a new average contraction of 1.6% y.o.y., which implied a deterioration of 0.4 p.p. compared to the previous survey. The open unemployment rate for the third quarter of the year was projected at 6.9% of the Economically Active Population (EAP, unchanged from the previous survey).

For the average of the members of the Top-10, the unemployment rate is also estimated to have stood at 6.9% in the same period. For November, REM participants forecast a BADLAR rate of private banks of 128.8% TNA, equivalent to a monthly effective rate of 10.6%. REM participants expected an interest rate hike in the next two months, reaching 139.4% TNA in January, equivalent to a monthly rate of 11.5%. Those who best forecast this variable in the short term predicted, on average, that it would stand at 127.5% in the month of November.

REM analysts forecast the nominal exchange rate at $381.8 per dollar for the average of November 2023 (a parity 4.3% lower than that projected in the previous survey for this same month). Those who have more accurately forecast this variable in the past estimated that the average nominal exchange rate for November will be $404.8/US$. Between Dec-23 and Apr-24, the group of participants forecasts positive rates of variation for this variable, projecting a wholesale dollar price of $811.8 in Apr-24. Regarding the value of exports (FOB), those who participate in the REM estimated an amount, for 2023, of US$67,992 million, higher than the forecast of the members of the Top-10 who projected the value of exports at US$67,515 million. As for imports (CIF) for the year 2023, the projections for the set of REM participants stood at US$74,542 million, while the members of the Top-10 estimated them at US$74,731 million. Thus, the participants of the REM contemplate, for the year 2023, a deficit FOB-CIF trade balance of US$ 6,550 million.

For 2024, they expect a trade surplus of US$ 9,904 million. Finally, the projection of the primary fiscal deficit of the National Non-Financial Public Sector (NFPS) made by the participants of the REM stood at $ 5,289 billion for 2023 and $ 4,000 billion for 2024 (a deficit greater by $ 284 billion and $ 251 billion than that surveyed in the previous survey, respectively). The average projections of the 10 most accurate forecasters for this variable reaches a deficit of $ 4,917 billion for 2023.