On Monday, the Organisation for Economic Cooperation and Development (OECD) stated that Argentina’s inflation rate is projected to significantly increase to 250.6 percent this year, while its economy is expected to decline even more than previously predicted.
Latin America’s third largest economy is currently experiencing widespread protests following the implementation of extensive reforms by the newly inaugurated libertarian President Javier Milei, resulting in a significant decline.
The OECD stated in their latest world economic outlook report that Argentina is expected to experience a decrease in its output in 2024 due to high inflation and significant reductions in government spending. However, they anticipate a recovery in growth in 2025 as the implemented reforms begin to have an impact.
In its previous report in November, the Organisation for Economic Cooperation and Development had predicted that the average annual inflation rate would be 157.1 percent. However, the OECD stated that the rate of consumer price increases in Argentina and Turkey had significantly quickened towards the end of 2023, indicating that this would have a strong impact on the average annual inflation for 2024.
According to the report, the increased inflation in both countries can be attributed to lenient macroeconomic policies implemented in the past.
The current prediction for Argentina’s economy is a decline of 2.3 percent in this year, which is higher than the previous forecast of 1.3 percent by the OECD in November.
Milei commenced his tenure by decreasing the value of the peso by over 50 percent, reducing government assistance for fuel and transportation, halving the number of ministries, and eliminating numerous regulations to promote economic deregulation.
Last week, the head of IMF, Kristalina Georgieva, commended the Milei administration for their courageous efforts in restoring overall economic stability and tackling longstanding obstacles that hindered growth.
– TIMES/AFP
