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Itaú Says Drought To Take A Toll On Activity

  • Itaú have revised their GDP forecast for 2023 down to -3% from -1.5%, in acknowledgement to recent estimates of a 20% loss of soy and corn production due to bad weather conditions and a negative carry from 2022, in addition to the tight import controls.
  • They also expect an acceleration of inflation in 1Q23, despite the expected contraction in activity due to persistently high inflation expectations as well as inconsistent fiscal and monetary policies. They maintain their inflation forecast of 100% for this year, with upward risk.
  • Itaú expect the administration to once again resort to multiple exchange rates and controls to boost the country’s minimal international reserves and avoid a disorderly depreciation of the official exchange rate.

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