The International Monetary Fund did this Tuesday to forecast of the dark world economyl for next year and said that “the worst is yet to come”, while for Argentina he projected a decline in GDP from 4% to 2% in 2023.
The Fund disclosed its traditional Global Economic Outlook (WEO) report as part of the Annual meeting of the organization and the World Bank to be held this week in Washington, where finance ministers and central bank presidents from around the world arrive to discuss the most pressing issues.
Presented by Pierre-Olivier Gourinchas, IMF economic adviser, the report warns that “the world economy continues to face great challenges, due to the persistent effects of three powerful forces: Russian invasion of Ukrainea cost of living crisis caused by inflationary pressures persistent and growing, and the slowdown in China.
The Fund expects global growth to remain unchanged in 2022 from its previous estimate, at 3.2%, and slow at 2.7% in 2023, 0.2 percentage points lower than the July forecast. It also warns that there is a 25% chance that it will fall still below 2%.
“More than a third of the world economy will contract in 2023while the three largest economies, the United States, the European Union and China, will continue stagnant. In short, the worst is yet to come, and for many people 2023 will seem a recession“.
What will happen to Argentina in 2023
Argentina follows the trend of this global phenomenon, even though it is tied to a $ 44 billion program with the organization, which is in constant surveillance. In fact, last Friday the board of directors approved the numbers for the second quarter of the year to grant a new disbursement.
In its annual report, the IMF had predicted that Argentina it will grow by 4% this year and that GDP will only increase by 2% next year. The figures are in line with those revealed last week by the World Bank and slightly above the growth average in South America, 3.6% this year and 1.6% next year.
Argentine inflation is the second highest in Latin America, after Venezuela. Measured at the end of the period, they estimate it will be 95% this year and drop slightly, to 60% in 2023.
Unemployment, meanwhile, will be 6.9% this year and next, slightly lower figures than in Brazil, Colombia, Paraguay and Uruguay.
In the report, the Fund warns that “the Russian invasion of Ukraine continues to strongly destabilize the global economy. Beyond the growing and senseless destruction of lives and livelihoods, it has led to a severe energy crisis in Europewhich is dramatically rising cost of living and hinder economic activity.
They noted that inflation is a major concern of the authorities. “Persistent and growing inflationary pressures have triggered a rapid and synchronized tightening of monetary conditions, along with a strong appreciation of the US dollar against most other currencies.
“We expect global inflation to peak at the end of 2022, but it could remain high for longer than expected, falling to 4.1% by 2024 ”.
brake in China
They also point out that China is slowing down due to frequent lockdowns from Covid and its slowdown in the real estate market and that this it will affect global supply chains and global trade and activity.
“The external environment is already very difficult for many emerging markets and developing economies. The strong appreciation of the US dollar adds significantly to domestic price pressures and the cost of living crisis for these countries. Capital flows have not recovered and many low-income and developing economies remain debt difficulties.
“Rising price pressures remain the most immediate threat to current and future prosperity, squeezing real incomes and undermining macroeconomic stability.”
Furthermore, they warn that “price controls, non-targeted subsidies or export bans are fiscally expensive and lead to excessive demand, insufficient supply, misallocation, rationing and black market premiums. History teaches us that they rarely work. Fiscal policy should instead aim to protect the most vulnerable through targeted and temporary transfers.
Source: Clarin
