Economic activity has been weaker than implied by soft indicators, even before the conflict. The longer and deeper-than-expected impact of the war poses clear downside risks to our pre-conflict 2026 GDP growth forecast of 4%, where a more severe trade-off on growth could happen, depending on the external financing needs.

Consumer prices inflation came in at 1.94% m/m in March, below both our (2.2%) and market (2.3%) expectations, bringing annual inflation down to 30.87%. However, rising energy prices, ongoing geopolitical uncertainty, and adverse supply-side factors are reinforcing upside risks to the inflation outlook.