MercoPress. South Atlantic News Agency

IMF estimates Argentine economy will expand 2.8% this year and 3.5% in 2014

Flat growth in Brazil which absorbs most Argentine manufactured goods has had a significant impact

The IMF estimates the Argentine economy is to grow by 2.8 % this year, exceeding estimations by private-sector analysts but below the 4% average set by the country’s forecasted budget. IMF 2014 projections for Argentina reach 3.5 % with renewed inflation and trade restrictions’ claims.

In its periodic World Economic Outlook, the multilateral organism points out that GDP in Latin America and the Caribbean grew by 3% last year in comparison to the 4.5% growth rates of 2011 following a decreasing foreign demand and the impact of countries' domestic troubles.

Deceleration has hit Brazil the most, thus negatively impacting on neighbouring countries such as Argentina. Brazil and China are Argentina’s main trade partners but the Mercosur associate absorbs most of Argentina’s manufactured goods. IMF admits that an adverse international scenario has hit Latam’s main economy and thus its Mercosur partners.

Argentina’s “extended imports and foreign exchange controls also affected trust in the development of business and investment activity” in the Brazilian market, the report describes.

Regarding inflation, the IMF estimates rates to reach 9.8% matching the Argentine government’s official statistics. However IMF recalls that a motion of censure has been issued against Buenos Aires over its alleged failure to provide accurate data on inflation and GDP.

“Figures are based on official data of Argentina but the organism has issued a declaration of censure and called Argentina to adopt corrective measures that secure the quality of official GDP and Prices Index data,” it says and warns the IMF is turning to “alternative” figures to address Argentina’s macroeconomic scenario.

Earlier this year, Argentina became the first country to be censored by the IMF facing expulsion risks and leading the administration of President Cristina Fernández to push on the implementation of the new Prices Index to be launched in September when Argentina’s requested progresses will be addressed again by the Fund’s board.

Private estimates of inflation in Argentina, the so called Congress index, an average of private agencies, plus those from some provincial governments, consumer organizations and trade unions hover close to 24% for the last twelve months.