The Argentine government's ambitious 2025 budget plans unveiled this week are underpinned by very optimistic economic projects and meeting the 'zero deficit' target will be challenging. And at the same time, there is little evidence that authorities will address the misaligned exchange rate. Meanwhile, the Brazilian central bank hiked interest rates this week but we think this will be a relatively short tightening cycle. The big risks to this view are further fiscal slippage and an intensification of the recent drought, which could have knock-on effects on food and energy inflation.
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