The International Monetary Fund it downgraded Argentina’s economic outlook on Tuesday for this year and projected that will have almost zero growth, just 0.2% in 2023, a period marked by drought, electoral uncertainty and a complicated schedule compliance with the agency. Inflation, they predict, will remain at levels “very high”.
The Fund has published the report of Global Economic Outlook (known as WEO, for its acronym in English), in the context of the Spring Assembly held together with the World Bank every April in Washington and attended by the ministers of the Economy and the heads of the Central Banks of the world.
the minister Sergio Massa will arrive on Thursday in the US capital to hold various meetings with IMF representatives within the assembly, as well as bilateral meetings and with US officials.
A few months ago, in a January 30 update, the Fund had forecast that the country would grow by 2% this year and so emphasized in the last staff reports who reviewed the program. But the impact of drought, runaway inflation and limited access to the dollar has complicated the outlook and they now expect next to zero growth in 2023 and just a rebound to 2% in 2024.
The report is in line with the one presented days ago by the World Bank, which predicted 0% growth for Argentina this year.
The average inflation that the IMF forecasts for 2023 is 98.6%, lower than that calculated by private consultants, who estimate that it could exceed 120%. point to point measurement at the end of the year, they expect it to be 88%.
Fund expects inflation to fall to an average of 60.1% by 2024. But, given the complex situation in Argentina, the numbers are changing at an alarming rate. Indeed the minister Massa will receive the March inflation issue in Washingtonwhich is due to be released on Friday and is estimated to be it will be around 7%.
The Global Perspectives report was presented by the Fund’s chief economist, Pierre-Olivier Gourinchas, who then held a press conference.
“The reason we have such a large downward revision, the product for 2023 is very low, is the massive drought which has a huge impact on the economy,” Gourinchas said when asked about the numbers for Argentina.
“We are revising the growth rate downwards for 2023, but in 2024 it should be 2%, which is roughly average.”
Another Fund official, Petya Koeva Brooks, added this
“Inflation ended last year at 94.8%, that’s a very high number. And we also saw a rebound in January, albeit partly due to food prices. The underlying inflationary pressures are still there and part of that is due to unanchored inflation expectations,” he said.
“So the way I would characterize our projections is that we expect inflation to remain high, at very high levels,” he added.
clarino pHe asked what measures the government should adopt to promote growth and curb inflation. “Here comes the importance of macroeconomic policies, monetary tightening and fiscal policies in line with the program supported by the Fund”said the official.
In the “unemployment” category, the Fund projects an increase from 7% in 2022 to 7.6% in 2023.
what will happen in the world
The Global Perspectives report was presented by the Fund’s chief economist, Pierre-Olivier Gourinchas, who referred to global growth starting to recover from the shock of the war in Ukraine, supply chain disruptions and inflation, although risks remain.
He also said that the massive and synchronized tightening of monetary policy by most central banks “should start to pay off, with inflation returning to target”.
In this framework, the international organization has predicted that global growth “It will hit 2.8% this year before climbing modestly to 3% next year. Global inflation will fall, albeit more slowly than initially expected, from 8.7% last year to 7% this year and 4.9% in 2024.
The Argentine case
The report presented the numbers but did not develop the Argentine case (surely the topic will be explored in Thursday’s presentation of the prospects for Latin America), but the Fund is closely following the vicissitudes of the country’s economy, which is IL principal debtor of the organizationand is in permanent contact with the economic authorities to monitor the programme.
Indeed, the fourth revision has just been approved, covering the last quarter of 2022, for which $5.4 billion was unlocked. But this last chapter including a relaxation of backup targets (3,600 in March and 1,800 at the end of 2023) mainly due to the strong impact of the drought.
While the Fund has relaxed that target, it cautioned “stronger policies”.
She said “the economic situation has become more difficult since the beginning of this year in light of the increasingly severe drought and political setbacks. Given the magnitude of the climate shock, some downward adjustments to reserve accumulation targets are warranted, even if a stronger political package is now needed to safeguard stability and maintain the anchoring role of the programme”.
He stressed that it is necessary to maintain the fiscal deficit target of 1.9% of GDPI – it was assumed that the government was trying to loosen it this election year – accelerate the reduction of energy subsidies for the wealthiest families and reduce the costs of the pension moratorium.
Washington (correspondent)
Source: Clarin
