MercoPress. South Atlantic News Agency

IMF foresees 2.6% GDP drop for Argentina this year - inflation 40%

Economy Minister Nicolás Dujovne is in Indonesia to present the “Argentine case” to the IMF, whose guidelines would lead to growth by 2023.

Argentina's GDP will fall 2.6% and inflation will reach 40% this year, according to the International Monetary Fund's Global Perspectives Report released Monday at the beginning of the body's annual Assembly in Bali, Indonesia.

 With the “firm implementation” of the adjustment, growth will be 3.2% ... in 2023, the IMF forecasts. The country will remain in recession at least until next year when inflation is expected to drop to 20%.

For next year, the agency expects the Argentine economy to contract 1.6%. In the budget bill, the Argentine Government estimates for 2019 a drop of 0.5% of GDP and an inflation of 23%.

Economy Minister Nicolás Dujovne is already in Indonesia to present the “Argentine case” and explain the fiscal adjustment measures in order to reassure the financial world that the country will honour its commitments.

Dujovne is to make the final adjustments to the Letter of Intent to be submitted before the IMF board during the meeting.

In the Argentine chapter of the IMF report, analysts pointed out that “after having grown 2.9% in 2017, Argentina is expected to contract its GDP 2.6% in 2018.”

It represents a profound revision “downwards compared to the forecasts of our global report of April 2018” (when predicted growth of 2%), said the Fund.

For the IMF, these changes in the outlook “reflect recent financial market disruptions, high interest rates and rapid fiscal consolidation under the stand by agreement approved in June.”

The report warns that the economy will fall 1.6% in 2019. President Mauricio Macri's term expires on December 9 but he is eligible to seek reelection.

But it maintains that in 2023 - when there is another change of government in the country and Macri will be unable to run, Argentina will have a growth of 3.2%, under the “firm implementation of the reforms and the return of confidence.”

The IMF also acknowledged the impact on the cost of living of the recent devaluation when the US dollar jumped from AR$ 20 to AR$ 38 between April and September.