The International Monetary Fund has trimmed its 2021 growth forecast for Argentina, predicting the economy will grow by 4.5 percent this year.
Previously, the multilateral lender had estimated growth of 4.9 percent this year, but the challenges of the Covid-19 pandemic and the fiscal constraints facing the country persuaded IMF officials to lower their forecast.
The prediction, issued as part of the IMF’s World Economic Outlook report this week, ran contrary to the improved outlook for Latin America and the Caribbean, which the Fund said would grow by 4.1 percent this year – a rise of 0.5 percent from previous predictions. According to the report, the region’s economy contracted by 7.4 percent last year.
The Fund’s officials also stated that they believe Argentina’s GDP contracted by 10.4 percent in 2020, mainly as a result of the coronavirus pandemic. The INDEC national statistics bureau has yet not issued its data for the full calendar year.
Looking ahead, the IMF now forecasts that Argentina’s economy will expand by 2.7 percent in 2022.
The IMF said the global economy is expected to see a strong rebound this year, but the coronavirus crisis is causing severe damage, slashings tens of trillions of dollars off GDP.
“Now at US$ 22 trillion,” a figure equal to the size of the entire US economy, “the projected cumulative output loss over 2020 to 2025, relative to the pre-pandemic projected levels, remains substantial,” IMF chief economist Gita Gopinath told reporters at a press conference.
Optimism that new vaccines will bring the pandemic under control and allow economic activity to resume, coupled with stimulus in major economies, has boosted the IMF’s growth forecast this year to 5.5 percent.
However, the Washington-based crisis lender warned the outlook is beset by “extraordinary uncertainty,” and governments will need to continue to act to prevent lasting damage after Covid-19 caused the worst peacetime economic crisis since the Great Depression.
According to the IMF, Brazil’s economy will grow by 3.6 percent after a 4.5-percent decline last year. The United States is predicted to enjoy a rebound of 5.1 percent this year, while China – a key trading partner for Argentina – is expected to see its GDP rise by 8.1 percent.