Economic outlook, analysis and forecasts

Argentina - Economic forecast summary (November 2018)


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A combination of massive fiscal and monetary tightening will keep the economy in recession during 2018 and 2019. Private consumption and investment will remain depressed due to lower real incomes and high interest rates, and unemployment will rise. However, a better harvest and a lower real exchange rate will support stronger exports.

In the wake of the crisis, Argentina adopted a large IMF programme. Faster fiscal consolidation and tight monetary policy will be a drag on growth in the short run, but are needed to reduce persistent fiscal and current account imbalances. This, and the planned greater independence of the central bank, if implemented, will help to restore confidence. Envisaged increases in social transfers would cushion the social impact of the recession. In the longer term, reforms in taxes, competition and administrative procedures will strengthen productivity. Tariffs have fallen in a few sectors, but more is needed to foster integration into the global economy. Reducing barriers to entrepreneurship is also essential.




Source: INDEC; Ministry of Economy; CEIC; and Thomson Reuters.

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