The World Bank recently released a report that revised its growth prospects for the Argentine economy. While they predicted a significant recovery next year, with a growth rate of 5%, this year’s GDP is now expected to fall by 3.5%. The adjustment policies of Javier Milei’s government are primarily responsible for this decrease. However, the organization also noted that the authorities in Argentina are implementing new policies to address economic challenges, such as fiscal consolidation and price readjustments.
The report presented in Washington provided updated projections for all countries. For Argentina, the recession projection became more acute as the World Bank now predicts a 3.5% contraction in GDP for 2024, before rebounding by 5% in 2025. Inflation is expected to remain high in Argentina this year but will decrease rapidly from a forecast of 200% in January to a current rate close to 90%. Although inflation has been declining in other Latin American countries, Argentina has experienced a rise in monthly inflation but is showing signs of easing.
Looking ahead to 2025, the report is more optimistic, with predictions of economic activity consolidation as macroeconomic imbalances are addressed and inflation is controlled. The World Bank estimates a 5% rebound in GDP for Argentina next year. They also revised the overall growth projections for Latin America and the Caribbean downwards, citing Argentina as one of the reasons for the change.
Globally, the World Bank expects world growth to stabilize at 2.6% this year and rise to 2.7% in 2025-26. They project that global inflation will moderate but remain around 3.5% this year. Central banks are likely to remain cautious about easing monetary policy due to continued inflationary pressures. In the coming years, policy benchmark interest rates are expected to remain approximately double the average from 2000-2019.
In conclusion, while there may be challenges facing the Argentine economy this year due to adjustment policies implemented by Javier Milei’s government, there remains hope for significant economic growth next year and beyond through fiscal consolidation and price readjustments aimed at addressing macroeconomic imbalances and controlling inflation
