Economic outlook, analysis and forecasts

Argentina - Economic forecast summary (May 2018)

 

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Economic activity is projected to rebound later in the year and growth is projected at 2% in 2018 and 2.6% in 2019, supporting further declines in unemployment. However, recently, the exchange rate has depreciated significantly amidst declining confidence and capital flight. The authorities have reacted with higher interest rates, exchange rate interventions, an accelerated fiscal adjustment and negotiations with multilateral lenders. Inflation has rebounded due to hikes in administered prices, currency depreciation and higher inflation expectations. This limits household real income growth and, together with weather-related declines in agricultural output, will dent growth in 2018. 

The gradual reduction of the high fiscal deficit is being accelerated to restore confidence. Recent structural reforms, such as a tax and capital market reforms, a new competition law, improvements in administrative procedures and lower trade barriers in selected sectors are welcome steps to strengthen inclusive growth. Further reforms to foster the integration into the global economy, enhance competition and improve access to quality education could build on this progress.

EO103 ARG

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