MercoPress. South Atlantic News Agency

IMF forecasts higher growth for Argentina this year, but reliability of official stats remains controversial

Indec stats, the dollar clamp and manipulation of foreign trade influence negatively Argentina’s economy

Argentina’s growth has recovered because of an abundant crop but economic activity continues to be contained because of the exchange rate and other administrative controls, according to the IMF latest World Economic Outlook (WHE), Latam and Caribbean chapter released on Tuesday. The IMF statement refers to Argentina’s export duties and the so called ‘dollar clamp’ which bans even saving in US dollars.

According to the IMF Argentina’s economy is set to expand 3.5% this year, quite below the 5.1% estimated on which the 2014 budget bill was based but above private estimates of 1.5% to 2.5%. Regarding next year IMF estimates GDP expansion at 2.8%, which is far below the 6.2% of the Argentine government, again according to the budget bill.

The IMF again questioned the reliability of Argentine official data referred to GDP and inflation, and recalled the pending censure motion on Argentina by the IMF because of the lack of ‘international standards’ to calculate vital stats, precisely GDP and inflation.

So far Argentina has been making efforts to show it is advancing in the elaboration of a new Consumer Price Index, and stats office Indec has advanced that the new GDP index will begin to be applied in the first quarter of next year. This is closely related to the sovereign bonds linked to Argentine economic growth.

More specifically on inflation the IMF estimates prices will advance 10.5% this year, but at the same time points out, as in previous WHE reports that ‘the data on Argentina is based solely on officially released stats”. Precisely because of the ongoing controversy over official stats and the new standards under elaboration, Economy minister Hernan Lorenzino has travelled on two occasions to Washington in the last month, this week for the IMF-World Bank annual assembly.

The Argentine budget bill estimates 10% inflation for 2014, but according to private estimates and other provincial stats offices the CPI is only second to Venezuela (38%) and in the high twenties.

Likewise because of the lack of reliability in the government’s official stats, IMF reveals that to assess the Argentine macroeconomic situation “it uses different sources of information and alternative data which are indicating real economic growth, but significantly lower than the official forecasts particularly since 2008 and similarly considerably higher inflation rates since 2007.