In the latest central bank poll of analysts, Argentina’s inflation estimate for the end of this year has been revised downward to 146.4%, marking a significant 15 percentage points drop from the previous forecast. This adjustment suggests a more optimistic trajectory for the beleaguered economy, albeit with lingering challenges.
For the month of May, projections from 23 consultancies and 13 financial institutions indicate a decrease in monthly inflation by 2.3 percentage points to 5.2%. Similarly, June’s inflation is expected to decrease by 1.3 points from earlier estimates, settling at 5.5%.
However, despite these positive adjustments, Latin America’s third-largest economy is anticipated to contract by 3.8% in real terms this year, according to the poll, representing a slight 0.3-point deterioration from prior forecasts.
Moreover, the forecast for unemployment has inched up by 0.4 percentage points to 7.4% for the first quarter of the year, reflecting ongoing labor market challenges.
Despite four consecutive months of decelerating monthly price increases, the annualized inflation rate remains alarmingly high, hovering close to 300%. In response, the government, led by libertarian President Javier Milei, has embarked on a stringent austerity campaign aimed at tackling the crisis head-on.
While the downward revision in inflation forecasts offers a glimmer of hope for Argentina’s economic prospects, sustained efforts will be required to address the underlying structural issues and achieve lasting stability.
