Due to the ongoing recession, Wall Street banks are projecting a slight decline in inflation and economic activity by the end of the year. JP Morgan’s latest reports predict a 3.6% annual decline in the economy and a 200% increase in retail prices by 2024, which is 11 points less than last year. The projected rebound in activity is expected to occur in 2025 after what they are calling the “great stagflation.”
JP Morgan’s analysis of recent official data shows that GDP dropped by 1.2% in January due to contraction in domestic demand. The bank believes that this was necessary to correct previous imbalances but acknowledges that policies in place may have exacerbated the contraction. Factors such as capital controls, devaluation, adjustment of spending, and reduction of inflation have contributed to the situation.
For the first semester of the year, JP Morgan predicts a severe adjustment in domestic demand due to various factors such as devaluation, inflationary acceleration, liquidity issues with pesos, correction of relative prices, negative real rates, and government fiscal adjustments. The collapse of industries, commerce, and construction is expected to result in a 15.3% drop in the first quarter, with a slight recovery in the second quarter and a 3.6% fall for the year overall.
The projected rebound in 2025 shows growth of 5.2% and inflation of 40%. Optimism on Wall Street is based on positive data such as trade surplus, reserve increase, fiscal surplus, and a slowdown in inflation from December to February. The exchange rate is expected to see adjustments over the year
