The International Monetary Fund on Tuesday improved its growth forecast for Argentina in 2021, forecasting that gross domestic product will increase by 7.5% this year.
Last June, the IMF had previously predicted that Argentina’s gross domestic product would grow 6.4% this year and 2.4% in 2022, but in its new World Economic Outlook report, the multilateral lender revised these forecasts to 7.5% and 2.5% respectively.
Nevertheless, the projections remain below the expectations of the government, which forecasts growth of 8% this year and 4% the following year. IMF forecasts indicate that Argentina’s economy will be one of the slowest growing in the region in 2022.
Regarding inflation and other fiscal variables, the IMF declined to offer forecasts for the period 2021-2026, saying that they “are to a large extent linked to the program negotiations still ongoing”.
On the other hand, the Fund predicted that unemployment – which reached 11.6% in Argentina in 2020 – would fall to 10% this year and 9.2% in 2022.
Zooming out, the IMF said the continued hit of the Covid-19 pandemic and failure to distribute vaccines around the world were deepening the economic divide and clouding the outlook for developing countries.
Global economic growth this year and next is expected to continue as the recovery broadly solidifies, but the overall numbers mask significant downward revisions and ongoing struggles for some countries.
“The outlook for the group of low-income developing countries has darkened significantly due to worsening pandemic dynamics,” said IMF chief economist Gita Gopinath.
The setbacks, which she blamed on the “great vaccine divide,” will impact the recovery of living standards, and a prolonged pandemic downturn “could reduce global GDP by a cumulative $5.3 trillion over the five coming years,” she warned.
Meanwhile, advanced economies face “a more challenging near-term outlook…partly due to supply disruptions.”
This threatens to drive up prices, especially in the United States, where growth this year will be slower than expected, even taking into account massive spending bills, the Fund said.
Global output is expected to rise 5.9% this year, slightly lower than expected in July, before slowing to 4.9% in 2022, the report said.
But the surge of infections of the Delta variant of Covid-19 and dramatically lower vaccination uptake in developing countries, along with supply bottlenecks, have slowed or pushed back the recovery in many economies. .
“The dangerous divergence in economic outlook between countries remains a major concern,” Gopinath said in a blog post about the new forecast.
Advanced economies are expected to return “to the pre-pandemic trend trajectory in 2022 and exceed it by 0.9% in 2024”, she said.
However, in emerging markets and developing economies, excluding China, production “is expected to remain 5.5% below pre-pandemic forecasts in 2024.”
Amid the danger of long-term scarring, “the most important political priority is therefore to vaccinate at least 40% of the population in every country by the end of 2021 and 70% by mid-2022”, he said. she declared.
Among the world’s largest economies, the IMF cut its 2021 forecast for the United States by one percentage point to 6%, mostly due to supply constraints, but raised its estimate for 2022 to 5, 2% versus 4.9%.
China will grow 8% this year and 5.6% next, down 0.1 points from July, the fund said. It raised its projection for the euro zone to 5% for this year, from 4.6%, and maintained its estimate for 2022 at 4.3%.
Forecasts for Japan, the UK, Germany and Canada have all been reduced for this year, but raised for 2022. Low-income countries are expected to grow by just 3% this year, or a slice of 0, 9 points compared to July.
The IMF has calculated that the gross domestic product of advanced economies will return to its pre-pandemic level in 2022 and even exceed it by 0.9% in 2024. But only two-thirds have returned to their previous employment levels.
Looking further ahead, the Fund said if Covid-19 had a prolonged impact, it could reduce global GDP by US$5.3 trillion over the next five years compared to current projections. This could be offset if governments step up efforts to equalize access to vaccines.