2024-08-17 23:31:25
GOOD AIRESThe International Monetary Fund (IMF) on Tuesday, July 16, worsened its forecast for a fall in Argentina’s Gross Domestic Product (GDP) from 2.8 to 3.5 percent for 2024, as a result of the economic contraction that the South American country has experienced in recent months.
In its World Economic Outlook (WEO) report, the multilateral organization revised its projection of the fall downwards by 0.7 points, but left its forecast for Argentine economic growth for 2025 at 5 percent.
“The downward revision of 0.7 percent is really a kind of negative carryover of the very significant contraction that we saw in the last quarter of last year,” said Petya Koeva, deputy director of the IMF’s Research Department, during a press conference in Washington, United States.
“Towards the end of the year, we expect the impact of this fiscal contraction to diminish, confidence to be restored and, basically, the national economy to recover,” he added.
Despite the correction of the GDP estimate, representatives of the financial institution highlighted the inflationary slowdown as a favorable result of the contractionary monetary and fiscal policies implemented by the Government of President Javier Milei together with the Central Bank of the Argentine Republic (BCRA).
In this regard, the Fund’s chief economist, Pierre Olivier Gourinchas, said that “first of all, inflation has fallen and that is the good news. Inflation has fallen significantly in Argentina.”
“In 2024, we are projecting around 140 percent. That is still a high figure, but it also reflects a lot of the inflation that has already occurred and sequential inflation is coming down fairly quickly thanks to the strong measures implemented by the country’s authorities,” the representative of the organization said.
However, he did reflect on the country’s capabilities to continue the current fiscal program in the future.
“The question is whether it will be able to continue doing so in the future, and that is where engagement with Parliament and the adoption of high-quality fiscal measures will be very important,” he said.
“All these measures are aimed at bringing inflation under control, which has been a key problem in the country, but it has an impact in terms of economic activity, of course, because there is less public spending, there are tighter monetary conditions, and this has led to a very significant slowdown for 2024,” explained the IMF Chief Economist.