Argentina Economic Outlook. December 2023

Summary

Javier Milei will be the new president of Argentina. He takes office with the challenge of correcting strong imbalances in the fiscal, monetary and exchange rate fronts. The adjustment of spending and changes in relative prices will lead to an acceleration of inflation and further contraction of GDP in the short term.

Key points

• Key points:
• The alliance with a wing of Juntos por el Cambio provides some moderation and greater governability to the new Government.
• The first announcements confirmed a strong fiscal adjustment, greater deregulation and opening of the economy, which in the short term will cause a greater drop in GDP than initially expected for 2024 (up to -4%).
• We expect rapid progress towards the normalization of the foreign exchange market, with a liberalization of restrictions that would generate a depreciation of the peso to ARS/USD 800 by the end of 2023.

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