The International Monetary Fund confirmed its support to the policies implemented by Argentina but felt that the recession this year will be deeper than initially expected. The agency is optimistic about the future, but provides for an inflation of 23.2%, above the 17% set as a ceiling by the goals of the Central Bank.
According to the report Global Economic Prospects, released today in Washington, “Argentina has begun an important and very necessary transition to a political and economic framework more robust and sustainable”. The document states that this process proved more costly than estimated at the beginning of the year and, consequently, corrected the forecast of a fall of the economic activity: it now estimates a decline of 1.8%, against a fall of 1% that was envisaged in the report of last April.
however, the Fund “expects growth to strengthen, reaching 2.7 per cent in 2017″ from a lower inflation and with the backing of the monetary and fiscal policies. In accordance with the forecasts included in the report, inflation would come down (from almost 40% in the current year) to 23.2 per cent in 2017. It is a forecast that is in line with estimates from private consulting firms, but that leaves the band of 12% to 17%, which established the Central Bank of the Republic of Argentina for the coming year.
The multilateral agency also predicts that unemployment will locate in 9.2% in the current year, to go then to 8.5% in the next. Instead, we expect an increase in the deficit of the current account, which would be a red equivalent to 2.3% of gross domestic product in 2016 to 3.2% in 2017.
The statistics argentina were criticized by the Fund during the administration of Cristina Fernández de Kirchner, but now the agency maintains that the new series launched by the current government to measure the gross domestic product “is in line with international standards.”
In regards to the measurement of inflation, the board of the entity also “has noticed significant progress made to strengthen the accuracy of the data on the consumer price index”, a topic that will be analyzed on the 15th of November next. So soon, the report clarifies that no published data of inflation in Argentina for the 2014 to 2016 period because during those years we used different indices that had differences in terms of geographical coverage and other methodological issues.
• Wind front
The international context, and particularly the field of Latin american, does not present the best scenario for the country. It is expected that the economic activity in Latin America and the Caribbean to continue decreasing, with a contraction of 0.6 percent projected by 2016, although the region is expected to resume the growth – 1.6 percent – the next year.
An important data point for Argentina is that the IMF points out that “it seems that confidence has bottomed out,” and the Brazilian economy would begin to recover. Projects a recession of 3.3 per cent for 2016 and a modest growth of 0.5 percent in 2017, assuming that will diminish the political uncertainty and the economic crisis.
In terms of the global situation, predicts a growth “mediocre” of 3.1 per cent in 2016, recovering to 3.4 per cent next year. This meager global economic growth occurs as a slowdown in the united States and in Great Britain, a country that was affected by a vote to quit the European Union.
“On the whole, the world economy has moved sideways,” said chief economist of the IMF, and Maurice Obstfeld. In this sense, were revised slightly downward the growth prospects for the advanced economies, while there is a better outlook for the rest of the world, particularly the emerging markets.
The report highlights the “precariousness” of the recovery when it’s already been eight since the global financial crisis. Obstfeld warned that “stagnation persistent, especially in the advanced economies, it could feed even more pretentious populist set restrictions on trade and immigration.” The economist assessed that such restrictions “would hamper productivity, growth and innovation”.
on the other hand, believes that “the growth has been very low for a long time and in many countries, its benefits have come to a few, with the consequent policy implications that possibly give rise to a depression in the global growth in the future.”
The Fund also warned about various risks that face the global economy: a difficult transition in China’s economy, a sharp fall in the prices of raw materials, the hardening of the financial conditions or an increase in barriers to trade, in addition to risks geopolitical
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