Argentina’s economy is expected to slow down in 2023 with a growth rate of only 2%, according to the latest World Economic Outlook update from the International Monetary Fund (IMF). This is a significant decrease from the previous year’s growth rate of 4.6%. The report also predicts that global growth will drop from 3.4% in 2022 to 2.9% in 2023, partly due to the impact of the Russian conflict with Ukraine.
The growth in Latin America and the Caribbean is projected to decline from 3.9% to 1.8% this year, due to tighter financial conditions, lower prices of exported commodities, and downward revisions to trading partner growth. The IMF has kept a close eye on Argentina, especially since the country reached an Extended Fund Facility (EFF) agreement with the agency in March 2022.
Argentina’s inflation rate spiked to 94.8% in 2022, the highest since 1990. However, household consumption rose by 10.2% last year, while the growth in gross fixed capital formation slowed down to 14%. The IMF believes that meeting the fiscal and monetary policy targets under the EFF program is crucial for stabilizing the economy.
According to Pierre-Olivier Gourinchas, the Economic Counsellor and the Director of Research of the IMF, the slowdown in Argentina’s economy is due to a combination of external forces and the tightening policies aimed at addressing the elevated inflation. The IMF deal requires Argentina to reach a 1.9% fiscal deficit this year.
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