The United States is ending its policy of opposing most lending to Argentina from multilateral development banks, the US Treasury Department announced. US Treasury Secretary Jack Lew informed Argentine Finance Minister Alfonso Prat-Gay of the move on Thursday when the two met in Davos, Switzerland, the department said in a statement.
The World Bank lowered its forecast for Argentine growth for the next two years, noting it expected the economy to see a large rebound in 2018 thanks to the monetary and fiscal policies implemented by President Mauricio Macri’s administration.
World Bank slashed its growth forecast for the global economy in 2016, citing “disappointing” growth in major emerging market economies like China and Brazil. The bank has cut its previous June forecast for global economic expansion in 2016 by 0.4 percentage point to 2.9%, though that is still faster than 2015's sluggish 2.4%, which itself missed an earlier prediction.
”It’s unfair to pin the blame on the August 11 Yuan devaluation because currencies were already declining due to the “unconventional monetary policies” of some nations, Raghuram Rajan was cited as saying in an interview with the SCMP.
The international economics establishment has stepped up pressure on the Federal Reserve to delay raising interest rates, with the World Bank the latest institution to warn that the US central bank risks sparking panic and turmoil in emerging markets if it increases rates next week.
The outlook for commodities remains grim for this year, except that oil will fall a bit less than previously forecast, the World Bank said. Average prices for fuels such as crude, natural gas and coal will tumble 39% from 2014, while those for materials like metals and fertilisers will fall about 12%, the Washington-based lender said in its quarterly Commodity Markets Outlook released Wednesday.
The International Monetary Fund (IMF) slightly improved its outlook on Argentina’s economy saying the country will grow 0.1% in 2015 and will remain stagnant in 2016. Nevertheless, IMF warned the country is going through a “very delicate” situation and insisted that the improved outlook doesn’t change its views regarding Argentina.
The World Bank’s Vice-President for Latin America and the Caribbean, Jorge Familiar, praised the region’s implementation of economic reforms, claiming that they had led to poverty reduction in the last few years, but he also warned that its pace was decreasing.
The World Bank is optimistic about the outlook for the Argentine economy, predicting the country’s GDP will grow 1.1% this year, a considerable upgrade from the decline of 0.3% it expected in January, and perhaps even stronger growth of 1.8% in 2016 and of 3% points in 2017, thanks to a “stronger” macroeconomic environment and “regained” access to international capital markets.
In its latest semiannual report, “Latin America Treads a Narrow Path to Growth: The Slowdown and its Macroeconomic Challenges,” the World Bank´s Office of the Chief Economist for Latin America and the Caribbean forecasts a fourth year of slow growth for the region.