Argentina projection note OECD Economic Outlook November 2022

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Argentina After a strong rebound in 2021 and an expected deterioration in the second half of 2022, GDP is projected to rise by 0.5% in 2023 and 1.8% in 2024. The agreement with the IMF has significantly reduced uncertainty about shortterm macroeconomic policies, but the external situation remains fragile. High inflation will weigh on private consumption and will take time to recede. Tight capital controls and policy uncertainty are leading to a sharp fall in investment in the second half of 2022 and their persistence will allow only a modest recovery in 2023 and 2024. Public spending will fall during 2022 and 2023, as pandemic-related fiscal support is withdrawn and energy subsidies are scaled back. Still, compliance with IMF targets will require further spending restraint. A planned sharp reduction in monetary financing will reduce inflationary pressures in the medium run, reduce the gap between the official and the parallel exchange rates and decrease the risk of devaluation. Stabilising the macroeconomic situation and lowering inflation are crucial to reduce high poverty and mounting social pressures. Economic activity is stagnating Economic growth continued to progress in the first half of 2022, but at a slower pace. Short-term indicators point to further slowing during the third quarter of 2022. The unemployment rate has returned to pre-pandemic levels, reaching 6.9% in the second quarter of 2022, although informality has increased sharply, approaching 38% of the labour force. Year-on-year headline inflation rose to 88% in October, amid unanchored one-year ahead inflation expectations of 99% and a widening gap between the official and the parallel exchange rate.

Argentina

Source: Refinitiv; BCRA; and Ambito.com. StatLink 2 https://stat.link/dgrib6

OECD ECONOMIC OUTLOOK, VOLUME 2022 ISSUE 2: PRELIMINARY VERSION © OECD 2022


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Argentina projection note OECD Economic Outlook November 2022 by OECD - Issuu