Difficult diagnosis of the IMF on Argentina: “Inflation is high and much remains to be done to stabilize the economy”

The International Monetary Fund (IMF) today warned that inflation in Argentina is high and not well anchored to reduce it.

This was stated by the organization’s chief economist, Gita Gopinath, when you answer a question from Infobae on the country’s economic outlook and, in particular, on how to deal with macroeconomic imbalances highlighted by staff in the past.

“Argentina, like many other countries in the region, has also had to deal with many waves of this pandemic and it should be noted that the most recent wave containment measures have only allowed the effect on activity economy is not as negative as previously expected.Gopitah said at the virtual Washington press conference at which he released the new Global Economic Outlook (WEO) report.

At the same time, he pointed out that “Argentina also benefits from an increase in the price of foodstuffs, as it is one of its main export products.”

Immediately he clarified: “Of course there are still significant challenges, because inflation is very high and inflation expectations are not yet well anchored and there is therefore a lot to be done to achieve macroeconomic stabilization ”.

However, to balance, he considered that “The government has worked hard on this and we are working closely with Argentina to help forge what would be a stronger economic framework.”

Previously, the Fund predicted Argentina will grow 5.8% this year and 2.2% next, according to the WEO.

We must not forget that the minister Martin guzman traveled to Washington to meet the Managing Director of the Fund, Kristalina Georgieva, and technical staff, to advance in the negotiation of a program allowing the country to defer the repayment of the principal of the loan of 45 billion dollars that it took from the government of Mauricio Macri. While there were some conceptual coincidences on this tour, the minister hinted that the deal could be postponed after the October election, although he appears to prefer it to be signed between May and June for avoid economic problems in the months to come. The day after tomorrow, the Minister will speak in the virtual assembly of the IMF in front of his peers.

Previously, Gopinath and his team discussed the situation in Brazil and Mexico. On the country he presides Jair Bolsonaro indicated that its top challenge is to accelerate the pace of pandemic vaccination, while its second, Petya Koeva Brooks, indicated that while the first quarter will show a negative number, the second is expected to rebound as remittances to the most vulnerable population increase.

As for the Mexican state, it affirmed that a “two-speed recovery” is observed, but specified that it will benefit, like Canada, from the solid recovery plan launched by the Biden administration in the United States, which will allow this country to be one of the few which this year will fully recover what it lost in 2020. In addition, he said that in the second quarter vaccination should accelerate and that this will result in a increase in GDP.

During the virtual meeting, Gopinath pointed out that the world will grow by 6% this year, after falling 3.3% in 2020 and announced that in 2022 it will grow by 4.4%, with a better outlook than in January, when the last revision of the WEO.

In any case, he clarified that the pandemic is far from over and that countries will therefore have to apply “tailor-made” aid to cope with the coming months, while vaccines are arriving by drip, especially in the regions. developing countries. In this regard, he indicated that the IMF predicts that emerging countries will just finish vaccinating next year.

For this reason, he felt that, unlike what happened during the previous global crisis in 2009, this time developing countries will be more affected than richer nations and admitted that this would translate into a level highest level of global poverty and indigence.

On the other hand, Gopinath expressed the Fund’s support for the proposal of the Secretary of the Treasury, Janet Yellen, to implement a global corporate tax rate – so as to mitigate the bailouts and avoid unfair competition between countries – and considered that such a measure would not affect the tax rate. investment in the United States, because the “evidence” of the reduction adopted in the Trump administration does not suggest otherwise.

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