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IMF forecasts 5.5% expansion in Argentina next year

Wednesday, October 17th 2007 - 20:00 UTC
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Argentina is forecasted to expand 5.5% in 2008, the strongest in the region behind Venezuela and Peru according to prospects from the World Bank and the International Monetary Fund released Wednesday.

"Commodities exporters can be affected by any drop in food, metals or energy prices as a consequence of a slower growth of global demand", said the IMF in reference to South America. However the IMF kept its 5% growth forecast for this year and 4.3% in 2008, although the current financial turbulences in the high risk credit market in the US could have an impact in the area. "Following 5.5% growth in 2006, we expect expansion to moderate to 5% in 2007 and 4.3% in 2008", said the IMF. Last July IMF added a tenth of a percentage to the 4.9% estimate of April and skimmed a similar percentage from the 4.4% forecast for next year. Venezuela is the country expected to see the strongest growth in the area this year with 8% GDP expansion followed by Argentina, 7.5%; Peru, 7%; Colombia, 6.6%; Chile, 5.9%; and Central America 5.4%, while the region's largest economies Brazil is expected to grow 4.4% and Mexico, 2.9%. However in 2008, Venezuela and Peru will lead with 6%, ahead of Argentina, 5.5%, Brazil 4%; Central America, 4.9% and Mexico, 3%, said the IMF report. Prospects of a moderate slowing of growth in the region, following four years of strong expansion, partially reflect the consequences of a deceleration of activity in United States, --particularly for Mexico and Central America--, states the IMF which forecasts United States economy will expand a modest 1.9% in 2008. The impact is to be felt through the "close economic links as well as a slower flow of migrant workers remittances". In South America the IMF expects growth to moderate compared to the high levels achieved in 2006 by commodity exporting countries such as Argentina, Peru, Uruguay and Venezuela, "partly because of the growing limits to supply". IMF also points out that so far the impact of the recent financial developments has been relatively contained in Latinamerica because of the strengthened macroeconomic policy structures. Nevertheless IMF warns that a "much weaker pace of the US economy will end affecting the demand for Latinamerican exports, particularly Mexico and Central America, because of its closer links with the US" As in previous reports the IMF reiterated its call on the region's countries to take advantage of the good economic circumstances "to advance necessary reforms in support of faster growth of investment and productivity".

Categories: Economy, Argentina.

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