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Macri's Argentina forecasted to grow 0.7% this year and rebound to 1.9% in 2017

Friday, January 8th 2016 - 18:13 UTC
Full article 12 comments
“The new government in Argentina is expected to implement monetary and fiscal tightening in 2016, pushing a rebound in growth to 2017”, says World Bank “The new government in Argentina is expected to implement monetary and fiscal tightening in 2016, pushing a rebound in growth to 2017”, says World Bank

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.

 The negative forecast is shared by most of the Latin American countries, as commodity-dependent countries such as Brazil and Venezuela are expected to drag down the entire region.

Argentina will grow 0.7% this year, instead of the 1.8% previously expected, and 1.9% in 2017, also 1.1 percentage points lower than the previous report. The country would then see a three-point growth in 2018, the World Bank said.

“The new government in Argentina is expected to implement monetary and fiscal tightening in 2016, pushing a rebound in growth to 2017, as investment slowly strengthens on renewed investor confidence and leads the recovery,” the report estimates.

The World Bank highlighted that Argentina saw an activity rebound of 1.7% last year but said the increase wasn’t “sustainable” as it was partly due to a surge in pre-election public spending. The report mentioned the accumulated drop of Argentina’s exports as well as the “very high” inflation rate.

Output in Latin America and the Caribbean will be flat this year, down from a 2.1% growth forecast last June, according to the World Bank. That’s due to a weaker outlook for South America, particularly Brazil and Venezuela. South America is forecast to contract 1.1% in 2016, versus the 1.7% growth the World Bank expected in mid-2015.

Brazil’s economy will contract 2.5% this year, versus the World Bank’s prior forecast for a 1.1% expansion. Venezuela will shrink 4.8% down from the previous forecast for a 1%. They will emerge from recession in 2017 and 2018, respectively.

“A protracted slowdown in one or both of these economies could have negative spillovers across the region,” the report said.

Growth in Mexico, Central America and the Caribbean will offset Latin America’s decline this year. Their outlook is brighter due to closer economic ties to the firming US market, the report said. Mexican exporters will also benefit from a weaker peso and reforms, including those that last year helped boost non-oil revenues to offset crude’s decline. Mexico will grow 2.8% in 2016.

The World Bank also cut its global economic growth forecast for 2016, saying the weak performance of major emerging market economies will tamp activity overall, as will anemic showings from developed countries such as the United States.

Global growth should accelerate to 2.9% this year from 2.4% in 2015, the bank said, but that still represents a downgrade from its June forecast for 3.3% growth.

Categories: Economy, Argentina.

Top Comments

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  • Briton

    Some say, British consumers should boycott all argentine goods and services until they grow up and stop its abuse and threats of the Falkland's

    why should the British public help the argentine economy when they are trying to destroy the Falkland's.

    so they say.,

    Jan 08th, 2016 - 06:43 pm 0
  • Zaphod102

    A friend in BA who has been out of work for almost a year was offered a new job yesterday. He'd resigned from his previous job because the sillyness and stress had become too much.

    So that is one small encouraging sign that there is work becoming available for non-gnocchis which must be good for the economy.

    Interesting to note that the +1.7% last year was an unsustainable blip so that a 0.7% growth this year would effectively be an understatement of the true effect on the economy once the gnocchi factor is taken into account.

    Jan 08th, 2016 - 06:50 pm 0
  • chronic

    What do you buy from them?

    Jan 08th, 2016 - 06:52 pm 0
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