The International Monetary Fund (IMF) worsened its forecast for the Argentine economy by estimating that it will fall this year by 2.5%, although it also expects it to recover and grow by 2.8% in 2024.
The forecast for this year reflects a sharp reduction with respect to the one released last April by the agency, when it projected that the Argentine GDP would grow 0.2% in 2023, which at that time implied a decrease of 1.8 percentage points against the estimate at the beginning of the year.
The impact of the drought was taken by the IMF as one of the aspects that most complicated the growth numbers for this year.
However, it also improved its estimates in relation to 2024, since in April it had marked a slight growth of 0.2% and now it has raised it to 2.8%.
These new estimates arise from the update of the figures of the World Economic Panorama (WEO) that the organization released this Tuesday, July 25. It is worth remembering that in this report, the multilateral organization offers projections for the economies of its member countries.
What the IMF said about the drought
During a press conference, the organization’s chief economist, Pierre Olivier Gourinchas, assured that “Argentina went through a very difficult situation due to the drought” during this period and pointed out that “an inflation rate of 120% is expected for 2023,” which requires monthly “rate moderation” to reach that figure.
What does the IMF expect from inflation this year?
Another of the great issues that concern Argentines is the cost of living. In relation to this phenomenon, although it has slowed down in the last two months, it is still at high levels. In these latest WEO projections, the IMF estimated that Argentine inflation could reach 120% this year, against the 88% it had estimated in April.
Although it is a considerable rise, it is still behind local forecasts. For example, the latest survey of the Survey of Market Expectations (REM) shows that the Central Bank usually estimates inflation for the whole year at 142.4% year-on-year.
Inflation and economic activity in the world
In terms of global inflation, the IMF WEO report states that “it is declining in most countries, but it remains high, and there are disparities between countries and in the way it is calculated.”
In that aspect, he considered that world inflation would decrease from 8.7% recorded by 2022 to 6.8% in 2023, while by 2024 it would be 5.2% per year.
Regarding global economic growth, the IMF projected a “slowdown” with changes in its composition. It is projected that the average annual global growth will decrease from 3.5% by 2022 to 3% in 2023 and 2024.
For emerging and developing economies, it is estimated that growth will reach 4% in 2023 and 4.1% in 2024. For example, he projected that in Latin America and the Caribbean, GDP would fall from 3.9% in 2022 to 1.9% in 2023 and 2.2% in 2024.
For Latin America, the IMF expects the region to grow 1.9% in 2023, which represents an improvement of three tenths with respect to the agency’s latest projections published last April.
“The decrease between 2022 and 2023 is due to the recent moderation of rapid growth recorded in 2022 due to reopening after the pandemic, as well as the decrease in raw material prices.” “The upward review by 2023 is a consequence of stronger growth than expected in Brazil, driven by the increase in agricultural production in the first quarter of 2023, which has had a positive impact on the activity of the service sector,” he said.
