World Bank has improved Argentina’s growth outlook in 2021, expects 6.4% rebound

The World Bank has improved its growth projections for Argentina’s economy for this year and estimates that the gross domestic product will have 6.4% recovery, a point and a half more than she expected in her last global economic outlook report in January.

According to a report released on Monday, the World Bank expects the economy of Latin America and the Caribbean, most affected by the pandemic, will rebound in 2021 by 4.4% after falling 6.7% last year, although an “accelerated” process can enter and increase “inequalities within and between countries,” he warned in his biannual report on the region.

In this way, the body slightly improves its last predictions, in which predicts regional GDP expansion of 4% by 2021 after a crash of 7.9% in 2020.

The World Bank estimates Argentina’s economy will experience a recovery of 6.4%, a point and a half more than it expected in its last global economic outlook report in January.

“The region has been one of the most affected in economic and social terms. Their estimated decline in GDP exceeds that of both advanced economies and all other developing regions. With some exceptions, the results on this front have been systematically negativeThe World Bank explained.

In all cases, the entity acknowledged that there are certain aspects that give rise to optimism about future projections. First, the World Bank estimated that “while world trade in services has fallen drastically, merchandise trade held up relatively well. And given the rapid recovery in East Asia, and China in particular, most commodity prices are now higher than before the Covid-19 crisis, ”he said. declared.

“Secondly, remittances to the region have also increased compared to the time before Covid-19. This is encouraging, given its enormous importance for the standard of living in several countries of the Caribbean Basin and Central America, ”he continued.

Finally, he indicated a factor in which Argentina is not included. “A third positive development has been the continued access to international capital markets by most countries in the region.. In fact, overseas lending increased during the pandemic, which helped support economic policies despite limited fiscal space, ”the World Bank said.

“Most countries in the region have recorded large budget deficits since the start of the pandemic, with additional spending to support health systems, provide transfers to households and help businesses cope, ”the report continued. Argentina, without access to the international bond market despite the success of the debt swap with private holders, had to resort to monetary financing through issuance (and to a lesser extent investments in the local market) to cover its budget red during the pandemic.

Among the projections made by the organization, Panama and Peru are the countries that will experience the highest economic growth this year, with an expansion of the 9.9% and 8.1%, respectively. Then, Argentina, with around 6.4%; Chile with 5.5% and Colombia with 5%, all above the regional average; while Brazil and Mexico, the two largest economies, 3% and 4.5%, respectively.

Among the projections made by the agency, Panama and Peru are the countries that will experience the strongest economic growth this year, with growth of 9.9% and 8.1%, respectively.

In any case, the World Bank has explained that the vaccination rate will be the key to knowing what the region’s recovery will be in the end. “Forecasting is a challenge because it depends a lot on the evolution of the pandemic in the coming months. Producing vaccines on the scale needed to stop the pandemic is a challenge. With meager doses and limited capacity, vaccine roll-out is slow in most of the region, implying that herd immunity cannot be achieved until the end of the calendar year. The effectiveness of vaccines against new variants of the virus is also unclear, ”the agency concluded.

Last week the president Alberto Fernandez held a virtual meeting with the head of the World Bank David Malpass and promised that the government will “honor its debts”, while calling for coronavirus vaccines to be declared a global public good. The head of the credit organization recommended measures to promote private investment and asked the executive power to a fiscal policy that “reduces regressive subsidies” to tariffs.

Currently Argentina has a portfolio of 26 loans from the World Bank for a total amount of USD 6,149 million, of which USD 2,066 million remains to be disbursed throughout the year. Likewise, the entity has ratified its support for the approval of new investment projects in the areas of infrastructure, health, social protection, employment and climate change.

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