The International Monetary Fund
drastically reduced
Argentina's growth prospects for 2024 on Tuesday, amid the
adjustment of the new government of Javier Milei
, and said that the country
will fall into recession by up to 2.8%
, an abrupt drop compared to what it expected. estimated in October of last year.
However, the organization predicts a strong rebound for next year, when it projects
5% growth.
The Fund released this Tuesday the latest update of its Global Economic Outlook report – known as WEO for its acronym in English – from South Africa.
At a global level, the report talks about the
moderation of inflation and firm growth
that clear the ground for a “soft landing” of the global economy after the pandemic.
However,
Argentina,
immersed in a historic crisis and a harsh adjustment plan,
does not adapt to this global pattern.
The figures for Argentina estimated this Tuesday by the Fund had an abrupt change.
In the last October projection, which was made during the government of Alberto Fernández and
before the elections
that gave Milei the winner, the Fund estimated that the GDP would rebound from the decline of 2.8% in 2023 to
an increase of 2.8%. .8% this year.
But the forecast
changed for Argentina more than in any other country
surveyed by the organization: they now indicate that the Argentine Gross Domestic Product will fall this year to recessive levels of 2.8%, a difference of -5.6 percentage points with respect to the October screening.
This abrupt decline occurs in “the context of a significant adjustment of economic policy
to restore macroeconomic stability
,” the report says.
For next year, however, they predict that the Argentine economy will recover strongly by up to 5%.
Since October many variables have changed in Argentina.
The program goals that former minister
Sergio Massa had promised
to meet in August
crashed
in the middle of the
“Platita Plan
,” which included enormous fiscal spending and depletion of reserves, while the agreement with the Fund was frozen.
Then Milei arrived at the Casa Rosada predicting strong spending control and even more drastic measures than what the organization proposed, which
unlocked a technical review in mid-January with new goals
and promises of strong fiscal adjustment, restrictive monetary policy and more accumulation of reserves.
The final green light for this review must be given by the
executive board that meets this Wednesday in Washington to discuss the Argentine case and if approved
, a disbursement of some US$4.7 billion
will be unlocked .
Milei's plan includes
a fiscal adjustment with a reduction in subsidies,
rate increases
,
privatization
of public companies, reduction of expenses, cuts in transfers to the provinces, labor flexibility and many other measures to achieve the agreed upon goal of 2% primary surplus. with the organization, a package that will require a lot of effort on the part of Argentines with an economy that will cool down as the Fund now predicts.
The plan is reflected in the DNU and the omnibus law that is being debated in parliament and which failed to achieve consensus in its entirety.
But
Minister Luis Caputo insists that the goal will be achieved anyway.
The Fund likes these measures
and wants them to be expressed by consensus.
According to the
Reuters
agency , the board
could allow Argentina to postpone this year's last review
scheduled for September to allow Milei's management greater
scope
to apply economic reforms and, potentially, negotiate a new program.
What will happen in the world in 2024, according to the IMF
In its global forecast, the Fund projects
global growth of 3.1% in 2024 and 3.2% in 2025,
which means that the forecasts for 2024 are 0.2 percentage points higher than those of the edition of October.
“This is due to stronger-than-expected resilience in the United States and several major emerging market and developing economies, as well as fiscal stimulus in China,” they said.
The report forecasts growth in 2024 of 2.1% in the United States;
0.9% in the European Union;
4.6% in China;
1.7% for Brazil
and 2.7% for Mexico, among others.
In addition, the IMF noted that inflation is declining faster than expected in most regions as supply-side problems dissipate and tight monetary policy is implemented.
The overall level of global inflation is expected to decline to 5.8% in 2024 and 4.4
% in 2025, representing a downward revision of the 2025 forecast.
“In the face of disinflation and firm growth,
the likelihood of a hard landing has receded,
and risks to global growth are broadly balanced,” the report said.
However, he warns of some risks that could impact growth:
“The conflict in Gaza and Israel could intensify and affect the entire region,
which produces around 35% of the world's
oil
exports and 14% of Of gas.
The continued attacks in the Red Sea – through which 11% of world trade flows – and the ongoing war in Ukraine may cause further negative supply shocks to the global economic recovery, with food prices escalating, energy and transportation costs.”