The IMF improved its growth forecasts for the Argentine economy: 7.5% in 2021 and 2.5% in 2022

Tuesday, October 12, 2021 | 16: 48hs.

The International Monetary Fund (IMF) improved its growth forecasts for the Argentine economy, as it foresees a recovery of 7.5% for 2021 and 2.5% for 2022.

The figures are better than those projected last July by the agency and are above the regional and world average, and correspond to the latest World Economic Outlook (WEO) report, entitled “Recovery during a pandemic” , which was presented this morning by the Fund’s chief economist, Gita Gopinath

Last July, the Fund forecast a 6.4% recovery for Argentina, while now the estimates have been raised and equated with the numbers shown by the World Bank in the report presented last week.

For Latin America, the IMF projects a 6.3% recovery, while globally the recovery will be 5.9%, the latter being a percentage point lower than last July.

However, according to the report, Argentina – the rest of the emerging and low-income countries – will not reach pre-pandemic growth levels this year, neither this year nor in 2022, as would the developed ones, although all the forecasts are in question. trial for the continuity of the pandemic.

Regarding the inflation figures in Argentina, the IMF excused itself from making projections for the country due to the ongoing negotiations between the agency and Argentina, to reschedule the 45,000 million dollars of debt inherited from the previous administration.

“For Argentina, the fiscal and inflation variables are excluded from the publication for 2021-26, since they are largely linked to the negotiations of the program still pending,” the Fund clarified in the report.

Asked during the press conference on the price level in Argentina, Gopinath stated that “we maintain inflation expectations in Argentina as unanchored.”

And he continued: “They are still unmoored at this point also due to the greater dependence on monetary financing in Argentina. That is the current image. We continue to work in close collaboration at a technical level with the Government of Argentina to find solutions for a more sustainable growth ”, explained Gopinath.

Likewise, regarding the inflation that is pressing in general in the region, Gopinath said that “Latin America, like other parts of the world, is being affected by some global shocks, such as the increase in energy prices, the prices of raw materials, supply chain disruption, and that’s affecting price levels. “

In relation to this, he added: “There is variation between countries in terms of the extent of the recovery in domestic demand and the inflationary pressures that are occurring. So, as I said before, it is important that countries adapt their monetary actions to the specific circumstances of each country ”.

Regarding the employment figures of Argentina, the recovery of the economy allows estimating that unemployment will fall from 11.6% last year to 10% this year, a trend that would continue to decline for 2022, by projecting a rate of 9.2%.

Regarding the current account balance, the rise in prices of raw materials makes it possible to project a rise in exports that will raise the balance of trade and services abroad by 1% by 2021, and by 0.8% by 2022.

Globally, “the aggregate production of the group of advanced economies is expected to regain its pre-pandemic trend path in 2022 and exceed it by 0.9 percent in 2024.”

By contrast, aggregate production for the emerging market and developing economies group (excluding China) will remain 5.5 percent below the pre-pandemic forecast in 2024, “resulting in a further setback for improvements in their living standards “.

“These divergences are a consequence of the ‘large vaccine gap’ and large disparities in policy support,” the Fund said.

The presentation of the report, within the framework of the Annual Assembly of the IMF and the World Bank, coincides with the presence of the Argentine delegation in Washington, led by the Minister of Economy, Martín Guzmán, and the head of the Central Bank, Miguel Pesce, who are in town to attend these meetings and to continue negotiating a new program with the IMF.

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