MercoPress. South Atlantic News Agency

Argentina's economic fall worse than expected, IMF foresees

The IMF tied an overall setback in Latin America and the Caribbean to Argentina's performance

According to the latest issue of the International Monetary Fund's World Economic Outlook (WEO) report, Argentina's Gross Domestic Product (GDP) is expected to fall 3.5% in 2024, which represented a setback from the 2.8% predicted back in April. Regarding next year, the IMF kept the 5% growth projection unchanged.

The WEO does not include an estimate of Argentina's inflation this year. However, officials gathered at the ceremony marking the release of the latest issue agreed to bring the numbers down to 140% from April's 149.4%, it was reported.

The IMF also found that ”global growth is projected to be in line with the April 2024 World Economic Outlook (WEO) forecast of 3.2% in 2024 and 3.3% in 2025.“ However, ”the varied momentum of activity at the beginning of the year has reduced the divergence of output among economies as cyclical factors diminish and activity becomes more aligned with their potential,“ the credit agency stated.

It also warned that ”the acceleration of services prices is slowing disinflationary progress, which is complicating monetary policy“ and pointed out that ”upside risks to inflation have increased, raising the prospect of higher interest rates for an even longer period in a cone of rising trade tensions and greater political uncertainty.“

”To manage these risks and preserve growth, the policy mix must be carefully sequenced to achieve price stability and replenish diminished reserves,“ the WEO noted.

Regarding Latin America and the Caribbean, projections took a donward torun to 1.9% from April's 2%. The IMF tied these negative figures to Argentina's performance. Nevertheless, it mentioned a 2.7% expansion for 2025 after ”growth has been revised downwards for 2024 in Brazil, reflecting the short-term impact of the floods, and in Mexico, due to the moderation of demand.“ Brazil is thus projected to grow by 2.1% this year and 2.4% by 2025. As for Mexico, the Fund estimated a 2.2% increase in GDP for this year and 1.6% for the next.

In Buenos Aires, Presidential Spokesman Manuel Adorni, said these IMF figures did not ”surprise anyone“ and insisted that the Libertarian Government of President Javier Milei was ”ready for a great take-off and to start talking about other things.“ Adorni also admitted that Milei's Government still intends to obtain a new loan from the IMF. ”The fiscal and monetary program is solid, and the fall is nothing that surprises anyone,“ elaborated Adorni, a graduate Economist. In his view, the Fund's analysis are only ”projections“ with ”half of the year still ahead.“

Unlike in previous years when ”we have had a notorious fall in the economic activity, the work we have done in terms of economic order, has been brutal,” Adorni argued.