The agency of price risk Moody’s revised its economic forecasts downwards Argentina and the numbers are not encouraging for the rest “Emerging Markets” predicts that the growth will stay quite good in the next 12 to 18 months despite the difficult global economic environment.
A key point of the risk assessment agency’s update is that it warns against it volatility in commodity prices something that might hinder the slowdown of inflation and direct the organizations that make monetary policy of emerging markets have more trouble easing of interest rates. This would be extremely risky for Argentina. given the state in which the central bank’s coffers are (BCRA).
Moody’s view of Argentina
According to estimates by Moody’s economic activity will shrink by 3.5% this year while Annual inflation will reach an alarming 147%. A decline is expected by 2024 2.5% of economic activity and annual inflation that will skyrocket up to incredible 275%.
The harsh prognosis emanates from the report titled “Resilient growth with possibility of high inflation due to volatility in commodity prices“, in which Moody’s points out that inflation in Latin America has fallen overall in the current year, except in the case of Argentina.
The report states: “Except Argentina the five inflation-targeting economies in the year Mexico, Brazil, Peru, Colombia and Chile Inflation is expected to slow from 9.3% in 2022 to 6.5% in 2023 and 3.5% in 2024“.
However, Moody’s also lowered its growth forecasts Colombia and Peru due to the decrease in investments. High inflation, tighter financing conditions and weak external demand They will also slow down economic growth in these countries.
The agency had already warned afterwards primaries that the Argentine economy is likely to continue to face a problem high volatility significant price and exchange rate pressures and a lack of foreign exchange, which would contribute to persistent credit fragility.
Regarding the market’s reaction to the results of the primary elections, with the appreciation of the dollar and government decisions on interest rates and the depreciation of the official exchange rate, Moody’s emphasized that these factors along with other challenges such as negative net reserves at the central bank and a weak harvest, will continue to train or pressure on the economic outlook and financiers of Argentina.
Daniela Valenzuela, general manager of Moody’s Local Argentina and Uruguay, stressed the importance of leading Argentina’s next government. He pointed out that this is independent of the outcome of the elections the next government will have to make significant changes in macroeconomic aspects to stabilize important variables such as exchange rate and inflation.
