MercoPress. South Atlantic News Agency

World Economic Forum warns of dark future ahead for Argentina

Some analysts foresee inflation around 85% for the year 2022 if an agreement with the IMF is not reached

The World Economic Forum (WEF) has said Argentina's future was anything but promising as a result of the lethal combination of inflation and the state's financial collapse.

The WEF's predictions have thus joined other gloomy projections from economic media analysts and investment banks as the Government of President Alberto Fernández continues not to reach a deal with the International Monetary Fund (IMF).

In this scenario, the WEF foresees a widespread stagnation, rising unemployment and serious troubles to lower inflation.

The WEF's annual report which has been released recently in a virtual event also insisted on the concrete possibility of a “collapse of the State,” while Argentina was among the countries in the world with the most serious “problems of erosion of social cohesion.”

Specifically, the “Global Risks” report from Davos says the following about Argentina:

- Prolonged economic stagnation: zero or slow growth for many years. Argentina recovered in 2021 from the strong recession it suffered in 2020 due to the pandemic and the long quarantine, but it has suffered a situation of very low growth or recession in the last decade, with few exceptions, which affects all macroeconomic indicators.

- Employment crisis: structural deterioration of job prospects and working-age standards; unemployment, low wages, fragile contracts and erosion of labor rights.

- Collapse of the State: as a result of an internal conflict, breakdown of legal security and erosion of institutions. In the Argentine case, businessmen tend to highlight the lack of legal and institutional security as an element that goes beyond any partisan sign.

- Failure to stabilize inflation: inability to control rising general inflation. After registering 53.8% in 2019, in 2021 the CPI was 51.2% despite frozen prices, in addition to a slow devaluation coupled with no increases in utility rates. Analysts foresee inflation around 85% for the year 2022 if an agreement with the IMF is not reached.

- Digital inequality: unequal access to technology and virtual networks, as a result of unequal investment capacities, lack of tools in the workforce, insufficient purchasing power, government restrictions and cultural differences.