Inflation and unemployment of the hand of the IMF | The bottom …

After ten months of subordination of economic policy to the projects of the Monetary Fund, the projections for Argentina of its own body are down activity, inflation between the highest in the world and a further increase in performance. The World Economic Outlook – World Economic Outlook (WEO), released yesterday by the IMF, forecasts a 30.5% increase in retail prices in December, which would leave an average of 39, about 43.7% for this year. cent, being the sixth economy with the most inflation on the planet. Although the outlook for the economy's performance has improved slightly, with a drop of 1.2% this year, it was estimated last October an economic contraction of 1.6%, and it is only in 2020 that growth will be effective (2.2%). cent), employment will continue to deteriorate. For this year, the vacancy rate is estimated at 9.9%. "A larger contraction is expected in the first half of 2019, as domestic demand slows, with tighter policies (adjustment) aimed at reducing imbalances developing again in the second half of the year," says the Fund's global report, which is betting , as the national government does, "agricultural production resumes after the drought of last year".

A new report from the agency, with figures similar to those presented by the Fund's services who are monitoring the Argentine economy on the spot under the confirmation agreement, reports on the situation. effect of policies imposed almost a year ago. The report is known before the spring meeting of the Fund and the World Bank, which will be held this week in Washington, with the participation of ministers, secretaries of finance and finance and central bankers of member countries. Finance Minister Nicolás Dujovne and BCRA chief Guido Sandleris led the Argentine delegation to these meetings.

Last June, as the exchange rate and capital flight doubled the value of the dollar, the government turned to the IMF as a lender of last resort. As a condition, Christine Lagarde's agency imposed a bigger cutback than the austerity program already put in place by Cambiemos, with lower wages and higher rates. The objective is a zero primary deficit, which allows savings to ensure repayment of debt to the Fund. In addition, it emphasizes the reduction of wages and pensions, structural changes in work and pensions, the free exchange rate fluctuation and a monetary contraction to anchor prices.

No goals were met and expectations were worse than last October. "Inflation expectations should generate more persistent inflationary pressures in 2019 than expected," the fund says in its new document. By the end of this year, it forecasts inflation of 30.5% in Argentina and 21.2% by 2020, thus becoming the sixth country registering the highest inflation. high estimate by the IMF for this year. The first case is Venezuela – almost without concrete data – where it calculates "10,000,000" per cent, followed by Sudan (56.2 per cent), Zimbabwe (40.1 per cent), South Sudan (35.9 per cent). %). ) and Iran (31.2%) according to the statistical tables. Average retail prices in Latin America and the Caribbean will be 5.6%.

Although it forecasts for Argentina a lower decline in its activity, its diagnosis warns against "a change in preferences of investors who move away from badets in pesos and creates pressure on the currency and the capital account ". Clearly, he insists on the need to consolidate the budget result "zero target in 2019 and 1% of GDP in 2020" and "resume the program of budget reform". "It is essential to reduce the need for financing and avoid reactivating the pressures on liquidity," said the agency, although the result so far has been a phenomenal drop in tax collection. Argentina's current account deficit is estimated at 2% for this year and at 2.5% for next year, a figure that is expected to remain until 2024, compared to an average of 1.9% for the year. Latin America this year. What is clear is that the program does not provide for a surplus that generates real dollars to pay the external debt.

With the expected improvements in the second half of 2019 for the international economy, the IMF forecasts that global growth in 2020 will be 3.6%. "This return is based on a rebound in Argentina and Turkey and an improvement in several other emerging and developing markets in crisis and, therefore, subject to uncertainties," says World Economic Outlook. The economies that will drive global growth will be those of China and India.

In badyzing the financial conditions of the Fund's member countries, he argues that the differentiation responds to "political factors". In his report, he compares the different levels of interest rates and country risk applied by countries, for which he had to dedicate a distinct scale to the comparison with the exorbitant yields offered by Argentina and Turkey (see separately) . "Following on-going adjustments to reduce financial imbalances in Argentina and Turkey, these have decreased somewhat, but remain high, consistent with the improved risk outlook this year," the report says. However, Argentine country risk this week has exceeded 800 points. The report highlights the strong devaluation of the Turkish lira and the lira. And he says that to recover growth will have to adapt and wait.