IMF: Argentina improves conditions and recovery will help the global economy

Thea global economy will grow less that in 2018 and will manage to grow 3.3%, evaluated the International Monetary Fund (IMF) in its World Economic Outlook (WEO for his acronyms in English).

In su half-yearly review of global forecasts, the agency considered that only for 2020 will repeat a 3.6% leadlike the one of 2018.

Noting the weaknesses presented by global growth, the Chief Economist of the International Monetary FundGita Gopinath explained that In the short term, GDP growth will remain "moderate" and considered that for the the second half of the year will begin to notice a "modest" recovery.

This improvement middle term will come with the stimulus policies promoted by China, Recent improvements in global financial markets, the reduction of some temporary brakes on growth in the euro area.

Also for a "gradual stabilization" of conditions in the economies steps emerging markets, including Argentina and Turkeysaid the fund's chief research officer.

He stressed that "the momentum for improvement" will continue in 2020, where the Global GDP will push back to 3.6%, "a rebound in Argentina and Turkey" and some improvements in a range of other emerging and developing economies.

In return, "advanced economies will continue to gradually decelerate".

In the WEO, presented today in Washington in the run-up to the annual meeting of the IMF and the World Bank, it was pointed out thatThe slowdown in the economy is due to the impact of tensions between China and the United States derived from the one-year trade war with cross-fare, and Brexit.

For the United States, it will increase by 2.3%, which is lower than estimated in January and 1.9% for the forecast for 2020. For China, it has increased this year's growth at 6.3% and reduced its estimate to 6.1%. for next year. For the euro area, the IMF reduced growth to 1.3% in 2019 (against 1.6% in January).

In this restrictive context, the The fund cuts growth forecasts for emerging and developing countries less, for those who project a rise in 4.4% this year and 4.8% for the next (0.1 point below the previous estimate).

Latin America, at a slower pace

AT Latin Americaon the other hand, estimated at advance of 1.4% for this year and 2.4% in 2020, a reduction of 0.6 and 0.1 points respectively compared to the January forecast.

Planned a slower recovery for Brazil and Mexico in the medium term.

AT the South American giant, the bottom now expects GDP growth of 2.1% this year before the uncertainty generated by the tax reform program that the government of Jair Bolsonaro must carry out with the pension reform the center of attention.

On this point, Gopinath said that they expect this year to be news on this subject. In 2020, the Fund Expects a 2.5% increase in the growth of the Brazilian economy, slightly above what has been estimated so far.

Focus in Argentina

On Argentina, WEO has reproduced the disseminated data. Friday in the staff report with which the third revision of the confirmation agreement was closed and approved and triggered the fourth disbursement, amounting to $ 10.8 billion, which is expected to enter today In the coffers of the country.

He stressed that Argentina will help the growth of Latin America for this year and next year, as well as for emerging countries to lead the rise in global GDP, based on a improvement in the expectations for local GDP.

In this sense, Finance projects for the Argentine economy to drop by 1.2% this year (compared with 1.6% last October), while improving an expansion of 2.2% for 2020 and an advance of 3.6% for 2024.

As indicated in the follow-up report, the body chaired by Christine Lagarde proposed that the Inflation in Argentina will close the year at 30.5%, 10 points higher than the previous estimate.

"The inflation expectations remain high to the extent that Argentina is adapting to a new regime of anchoring in a renewed monetary framework, "said the IMF, describing this process as" a remarkable temporary effect ".

For this reason, he stressed that essential to achieve the goal of zero deficit engaged in the confirmation agreement, in order to "strengthen investor confidence and sustainable growth".

In terms of activity, the WEO provides that contract in the first half of 2019 due to domestic demand slows because of tighter policies reduce imbalances.

And he predicts that the Argentine economy will grow again in the second half as recover real disposable income and agricultural productionAfter the drought of 2018, explained the agency.

"The the rise in nominal wages and the rise in inflation expectations will generate pressure inflationary more persistent in 2019for those planned in October, said the Fund. I consider that unemployment will reach 9.9% this year, an estimated 9.2% for 2018.

He also warned that "the downside risks for the economy remain considerable"and that your "Materialization could lead to a change in investor preferences against badets in pesos and press the currency and the capital account "Argentina.

The recommended body "the further implementation of the stabilization plan as part of the economic reform program IMF support is essential to boost investor confidence and restore sustainable growth that enhances the standard of living of all segments of society. "

To this end, "achieve the goal of zero primary fiscal balance in 2019 and 1% of GDP in 2020 is essential to reduce financing needs and avoid reigniting the pressures of liquidity, "he said.

"The pursuit of the achievement of monetary objectives will be crucial to re-anchor inflation expectations and restore the credibility of the Central Bank"said the IMF.

And reinforced what is needed "the resumption of the structural reform program" in the country.