Description

SUMMARY¹

Business performance remains moderate and has fallen short of expectations, in a context where the effects of the cost shock associated with the conflict in the Middle East continue.

Firms report weak business performance in a scenario where they continue to feel the effects of the conflict between the United States and Iran. They point to a significant increase in costs, both due to upward impact on fuel prices and the indirect effects on other factors, such as transportation and inputs.

Firms are facing weaker demand, alongside the perception of deteriorating consumer expectations.

Respondents indicate that consumers have become more cautious owing to higher fuel prices and a perception of a worsening local economic situation. In this scenario, sluggish sales have made it difficult to pass higher costs through to prices, further narrowing profit margins.

Expectations for the remainder of 2026 continue to be favorable, although subject to uncertainty, given cost pressures that are expected to become less intense and a somewhat improved domestic outlook going forward. Nevertheless, optimism about the future is lower than it was a few months ago.

Firms expect some costs to begin easing as the pressures associated with the conflict in the Middle East subside, which would alleviate, in part, the narrowness of its margins. Even so, they recognize a downward adjustment in their performance expectations for this year relative to what they had anticipated at the beginning of 2026.

The outlook for 2027 is perceived as somewhat more favorable, owing to expectations of reduced uncertainty.

According to respondents, greater clarity regarding the domestic political and legislative scenario, resuming investment projects, and a moderation of cost pressures would contribute to this improvement.

Financial conditions are perceived as somewhat less favorable in a context where requests for working capital loans are increasing.

Firms report a slight deterioration in access conditions to bank financing, mainly attributed to difficulties in renewing credit lines and longer approval times for loan applications. Despite this, the share of firms applying for credit has increased, which appears to be linked to the need to finance the portion of the cost shock that has not been passed on to selling prices. At the same time, both the rejection rate by banks and the share of firms that ultimately decline the financing terms offered have risen.

Inflation expectations from the Survey of Price Determinants and Expectations (EDEP) remain stable at the 12- and 24-month horizons, at 4% and 3.5%, respectively.

Inflation expectations at the 12- and 24-month horizons show little change relative to the previous survey. In the Business Perceptions Survey (EPN), although more than half of firms continue to expect inflation to remain above what they consider normal, this proportion has declined compared with what was reported in May. Nevertheless, the time horizon over which respondents expect inflation to converge to those levels has lengthened, which they attribute to the conflict in the Middle East lasting longer than they had anticipated.

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