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Home Argentine Politics and Economics IMF expects signs of growth for Argentina in 2020

IMF expects signs of growth for Argentina in 2020

An IMF report shows that measures will be taken during this year to reduce some imbalances, particularly on the fiscal front.

Politics and Economics
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The paper, presented at the World Economic Forum in Davos, Switzerland, estimates that the Argentine economy “will shrink, as planned, in 2019, as adjustment policies aimed at reducing imbalances slow domestic demand, before returning to positive growth in 2020,” says the IMF report.

The multilateral organization predicts that Latin America's economy will “grow 1.1% this year,” below what was estimated in the last October report, due to the fall in Mexican outlook and Venezuela's crisis.

The paper details that Mexico is expected to grow 2.1 for this year and 2.2% for the next year, two tenths less than the last estimate, due to a fall in private investment.

Brazil, for its part, will continue its “gradual recovery” with an expansion of 2.5% this year, a tenth less than expected, and 2.2% next, one more than expected in October last year.

As for the world economy, the chief economist of the multilateral organization, Gita Gopinath, explained today in Davos that “after two years of solid expansion, it is growing slower than expected and risks are increasing.”

In fact, according to the IMF's vision, the global economy will grow 3.5% this year, two tenths below October's calculations.

In mentioning the fundamentals of the fall in global growth, the IMF emphasized the “escalation of trade tensions”, while “financial conditions have already become more restrictive since October.”

“A number of factors, apart from increased trade tensions, could lead to an even greater deterioration in the attitude towards risk, which would adversely affect growth, especially in view of high levels of public and private debt.”

“Among these possible factors, he added, are the departure of the United Kingdom from the European Union without an agreement and a more significant slowdown than anticipated in China.”

In this regard, it is clarified that “the main policy priority is for countries to cooperate and quickly resolve their trade disagreements and the resulting policy uncertainty, rather than further raising harmful barriers and destabilizing a world economy that is already slowing down”.

“Actions are essential in all economies to stimulate potential output growth, achieve greater inclusion and strengthen fiscal and financial defenses, in an environment characterized by heavy debt burden and more restrictive financial conditions,” adds the work of IMF economists.

He notes that financial conditions in “advanced economies have become more restrictive since October,” and that “stock valuations - which were excessive in some countries - have receded due to less optimism over profit prospects amid rising trade tensions and lower expectations world growth”.

In addition, concerns “about a government shutdown in the US further undermined the financial sector's attitude towards the end of the year, and major central banks also seem to be taking a more cautious stance.”

The Davis Forum will be held throughout this week and this afternoon, finance minister Nicolás Dujovne and Central Bank head Guido Sandleris will travel on Thursday with IMF Managing Director Christine Lagarde.

Source: Telam.

Publication Date: 23/01/2019

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