IMF improved growth forecast for Argentina to 5.8% by 2021, but lowered it to 2.2% by 2022

The International Monetary Fund (IMF) has improved its growth forecast for Argentina this year, although it cuts them slightly from 2022.

This is reflected in the multilateral organization’s global projections, which were released today from Washington at the opening of the Spring Assembly held in collaboration with the World Bank.

While in January the Fund predicted that the economy would grow 4.5% this year – after estimating 4.9% last October – now the estimate has risen to 5.8%, above the projection of the national budget (5.5%), but below the new estimate of 7% revealed by Minister Martín Guzmán, who will speak on Thursday at this virtual meeting.

In exchange, For 2022, he cut his forecast for GDP growth in Argentina from 2.7% to 2.5%. In the data table, he also calculated that in 2026, growth would be 1.5%. The IMF has not released the country’s inflation projections for a few years, after the official indexes changed during the Kirchnerism period, between 2007 and 2015. Therefore, the only data reflected in the World Economic Outlook (WEO ) reported today are 36.1%. at the end of 2020, compared to the previous estimate of 42%.

IMF revised upward Argentina’s growth forecast for 2021 from 4.5 to 5.8 percent, while reducing it from 2.7 percent to 2.5 percent by 2022

In appendix, Fund economists explained the process of manipulation of the INDEC data recorded at that time, which in fact led to the multilateral organization sanctioning the government for “mistrust of its statistics”, in an unprecedented case for a democratic partner country of the organization. The situation was reversed from 2016 with normalization in the government of Mauricio Macri, but despite this, the IMF does not publish the country’s price statistics.

“The official National Consumer Price Index (CPI) for Argentina starts in December 2016. For previous periods, the CPI data for Argentina reflects the CPI for Greater Buenos Aires (before December 2013 ), the national IPCNu (from December 2013 to October 2015), the IPC of the city of Buenos Aires (November 2015 to April 2016) and IPC of Greater Buenos Aires (May 2016 to December 2016). Given the limited comparability of these series due to the difference in geographic coverage, weights, sampling and methodology, the average CPI inflation for 2014-2016 and end-of-period inflation for 2015 -2016 are not declared in the PEM. April 2021 ”, they specified.

Projections for the budget deficit are also not published. “In the case of Argentina, budgetary and inflation variables are excluded from the publication for 2021-2026, as they are largely linked to the program negotiations which are still ongoing ”, It was stated, in reference to the lengthy negotiations with the government to sign a new agreement on the $ 45 billion debt that the country is expected to cancel between 2021 and 2023.

The economist’s team Gita Gopinath He also said they forecast an unemployment rate of 10.6% this year and 9.3% next, after the 11% recorded at the end of last year by Indec.

Regarding the current account balance, the IMF forecast a deficit of 3.9% of GDP, after 3.3% last year. In 2022, the exterior red would drop to 3.9%.

Global rebound

The improvement of more than one point in Argentina’s economic projection is part of a somewhat more optimistic diagnosis by Fund economists at the global level, although with considerable disparities in regional and sub-regional terms due. quarantines (and the difference in speed of vaccination) which persist this year.

In this sense, the WEO underlined that “after a sharp drop in 2020, in 2021, only a slight recovery is expected and at varying rates in Latin America and the Caribbean ”, which, in regional terms, will increase by 4.6%.

“Thanks to the rebound in the global manufacturing sector in the second half of 2020, growth has exceeded expectations in some major exporting countries in the region (e.g. Argentina, Brazil and Peru), which raised the forecast for 2021 to 4.6% (a revision of one percentage point), ”acknowledged the Fund, in line with the best result presented by the country’s GDP in the last quarter of last year . Despite this, the year ended with a collapse of 9.9%, only surpassed by the 11% drop recorded in 2002 after the convertibility explosion. However, the agency’s economists warned that “The longer-term outlook continues to depend on the trajectory of the pandemic,” which particularly hits Latin America.

“With a few exceptions (eg Chile, Costa Rica, Mexico), most countries do not have enough vaccines to cover their populations,” they said, which was reflected in yesterday’s demand for several developing countries, including Argentina, to request financial support. multilateral organizations to get vaccines quickly and avoid long quarantines, as Guzmán himself warned.

Globally, the Fund expects “a stronger recovery of the global economy in 2021 and 2022 compared to our previous forecasts, with projected growth of 6% in 2021 and 4.4% in 2022”.

Globally, the Fund projects a stronger recovery in the global economy in 2021 and 2022 compared to our previous forecasts, with projected growth of 6% in 2021 and 4.4% in 2022.

However, they clarified, “The outlook poses enormous challenges related to divergences in the speed of recovery, both between and within countries, and the possibility that the economic damage from the crisis will persist.”.

“Recoveries are occurring at varying rates across regions and across income groups, linked to marked differences in the pace of vaccine implementation, the degree of economic policy support, and structural factors such as dependence on tourism. ”, Was indicated in the WEO.

Among advanced economies, “the United States is expected to exceed its pre-vaccination GDP level this year, while many other members of the group will not return to their pre-vaccination levels until 2022.”

Something similar is expected in emerging and developing countries, depending on the vaccination rate. “China had already returned to its pre-crisis GDP in 2020, while many others are not expected to do so until 2023,” they said.

“Diverging recovery paths are likely to generate significantly larger gaps in living standards between developing countries and others, compared to pre-pandemic expectations,” warned the report presented by the Fund’s chief economist. , Gita. Gopinath.

“The cumulative income losses per capita in 2020-22, compared to pre-pandemic projections, equivalent to 20% of 2019 GDP per capita in emerging markets and developing economies (excluding China)” , they noted.

In contrast, “in advanced economies, losses are expected to be relatively lower, at 11%.” “This has reversed progress in poverty reduction, and 95 million more people are expected to fall into the category of extremely poor people by 2020, and 80 million more undernourished than before,” they said. added. in line with the increase in poverty that was recorded in 2020 in Argentina, due to the aforementioned global crisis and the singular chronic problem of inflation and lack of economic growth of the last decade.

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