The government forecasts an inflation of 17% by 2019: what the consultants say

The draft budget for the 2019 election year presents a framework of optimism for the national government, in relation to the evolution of the economy in 2018.

Management President Mauricio Macri projects that the country's gross domestic product (GDP) will increase by 2%, that the annual inflation will be 17% and that the dollar will evolve into a free floating system. In the initiative that the Treasury Palace sent to Congress did not put an average value of the American currency.

In the official project is estimated, too, that in 2018 the economy will grow by 1%, although conditioned by the evolution of international financial turbulence. "However, in order to be cautious when developing financial projections for this year, we have been working with a growth of 0.4% for these purposes." In the meantime, he expects a "slowdown in the economy for the second quarter, which could be extended to the third."

On price developments, the badysis indicates that the "economic slowdown" is expected. inflation will decline from 2019, while for the three-year period 2019-21 inflation of 17%, 13% and 9% is projected, respectively. "In the course of 2019, the process of reducing inflation will continue," the report adds. The bill tabled in the lower house also maintains that "monetary policy remains entirely focused on reducing inflation." In this sense, "the Central Bank has set new realistic inflation targets, in response to the movements of the exchange rate."

Financing

Another interesting information proposed by the text to enhance the independence and solvency of the BCRA would be the definitive elimination of direct or indirect funding of the BCRA at the Treasure. Meanwhile, the interest rate will continue to be the main instrument of monetary policy

The report states that the exchange rate "is determined freely in the market, with occasional interventions by the government. monetary, to mitigate any disruptive behavior. "

Inflation in June is between 3.5% and 4.1% due to the acceleration generated by the strong devaluation of the peso and Argentina exceeded the 15% target set by the government for 2018.

The administration of Macri had a first calculation of inflation that went from 8% to 12% for this year, but December 28 recalculated and increased the goal to 15%, which was finally achieved Only five months after the change in inflation targets and after the outbreak of the currency crisis in late April, the government has recalculated and eliminated The direct goal of 15% for In 2018.

At that time, the Minister of Finance, Nicolás Dujovne said that the government is betting that inflation closes the l 39; year around 27%, 2.2 points higher than the one recorded in 2017, burying the path of disinflation.

The Consultants

According to consultant Elypsis, preliminary surveys indicate that monthly inflation in June was 3.8% nationwide, showing a sharp acceleration compared with May, when the indicator recorded an increase of 2.6%.

The Institute of Labor and the Economy, the Abdala German Foundation, reported that its price index (IRP) recorded a 4% increase per month in the sixth month of the year. year, reaching 29.6% per year.

According to Federico Furiase economist director of consulting firm Eco Go, in June "prices were hovering around 4%, accumulating an increase of 17% in the year and bringing variation in prices. one year on the other in June at the 30% area ". "The 4% increase in our overall index is explained by the acceleration of food and beverages that gave us 3.9%, the naphtha increase of 4.5% , prepayments in 7.5% and transport 11% in the collective ticket ", maintained the specialist.

For C & T Asesores, in charge of Camilo Tiscornia estimated inflation for June is 3.5% and that accumulated in twelve months by 30%. Similarly, Lorenzo Sigaut Gravina chief economist of Ecolatina, forecast inflation of 3.5% for this month and 30% for the entire year.

According to the company Abeceb, the increase in prices for the sixth month of the year reach 3.2%, while in December 2018 it will oscillate between 28 and 30%.

On the other hand, the indicators of the consultant Orlando J Ferreres & Asociados indicate that the June inflation showed a monthly change of 3.9% and a 28.4% increase from a year ago. year on the other. During this time, he has accumulated 15.5% during the first half of the year. At the same time, underlying inflation accelerated 3.3%, posting a year-on-year change of 23.1%.

Various consultants avoid giving their estimates because of the "volatility of the dollar", which complicates the calculation of the rise, taking into account the exchange rate in force since mid-April and which led the currency to increase more than eight pesos in less than three months.

The executive pledges to support contracts and not to intervene in the market [19659021] "The set of policies put in place and agreement with the IMF will allow us to to get through the financial turbulence without disrupting the economy: without breach of contract, without setting the exchange rate, without restrictions, stocks and a serious recession ". This is indicated by the executive branch in the submission to Congress of anticipating what the 2019 budget will be. "The Argentine economy has increased its resilience by adopting economic policies that will enable sustainable and integrated growth in the economy. the world, "completes the memoir.

Analysts expect an annual CPI of 30%

The Market Expectations Survey (REM), prepared by the Central Bank, showed that expected inflation by the market for all of 2018 is 30%. And that a dollar for December of 30.30 pesos is expected. These are the results of the survey conducted between June 27 and June 29. Thus, the inflation rate rose 2.9% compared to the May survey, while the expected inflation was 27.1%. In April it was 22% and in March it was 20.3%.

The expected inflation for the next 12 months also increased from 22.2% to 24.2%. In April, this value was 15% and in March 14.3%.