The International Monetary Fund has predicted that Argentina will catch up this year inflation close to 60%in line with what the Government proposes in the Budget, while local consultants estimate it it will be much higher, close to 100%.
In an update to the economic forecast for Latin America, IMF officials posted estimated numbers for the region in a blog Wednesday.
The analysis, signed by the experts Gustavo Adler, Nigel Chalk and Anna Ivanova, highlighted that the regional economies remained in good shape last year, with a rebound after the pandemicand despite the impact of the Russian invasion of Ukraine and global interest rate hikes.
A) Yes, Latin America grew 4% in 2022while the Argentina had a 4.6% expansion, slightly above the regional average.
The report notes this inflation is decreasing in many countries by the “early and determined” efforts of central banks, and also by falling food and energy prices.
However, the Fund warns that underlying inflation (which excludes food and energy) “remains elevated” in countries such as Brazil, Mexico, Chile, Colombia and Peru (around 8%).
The report does not mention the Argentine case in detail, even if the statistical table states that it closed last year with a cumbersome inflation of 95.9%, only behind Venezuela (220%).
The Fund therefore launches forecasts for this year. Despite encouraging signs for 2022, he predicts that “2023 is likely to be a challenging year” for Latin America.
He expects regional growth to slow to just 2% due to rising interest rates and falling commodity prices. Growth will also be held back by the slowdown in trading partners, especially the United States and the euro area. Furthermore, they underline, the risks that the situation will be complicated by derivatives of more restrictive financial conditions than expected and by Russia’s war in Ukraine.
For the Argentina they project to 2% growth this year, a notable drop of 4.6% last year. By 2024 they expect it to remain at 2%.
And in the inflation section, they estimate it will reach 60%, in line with what was delivered in the Budget for this year, but a figure that many Argentine economists believe will be exceeded.
In fact, in the latest survey of expectations carried out by the Central Bank in December, the consultants speak of 98.4% for this year. One company also expects higher inflation and places it at 135.6% (EcoGo).
By 2024, the Fund estimates a slowdown in prices of 40%, even if the consultants’ expectations speak of a 75% per year.
At a press conference on Monday, IMF chief economist Pierre-Olivier Gourinchas explained that Argentina is expected to grow 2% this year due to a “combination of the slowdown in the global economy and the adjustment policies in the countrymonetary and fiscal, to control the very high inflation”.
Furthermore, the official stressed the importance of continuing on the path set out in the Fund’s programme: “We believe it is very important that the policy objectives of the program with the IMF are achieved, both fiscally and monetaryally, it will help anchor inflationn forward”.
The Fund also highlighted the growing social tensions in the region due to poverty, high inflation, uncertainty and food insecurity. “Finding common ground to implement sensible economic reforms in a context of significant social tensions will be an uphill battle,” they noted.
“At the same time, the continued possibility of unrest and political paralysis has the potential to erode confidence and weigh on economic activity.”
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.