ECLAC downgrades Argentina economy forecast | Miley’s plan exacerbates the recessionary cycle

The Argentina’s growth prospects are becoming more complex. The ECLAC has downgraded its GDP forecast this Tuesday This year, due to the impact of the Milei government’s aggressive adjustment policies. The agency noted that the contraction projection for Argentina is worse than estimated in May: it now expects a sharper drop to 3.6% from 3.1% previously. He revised Mexico’s performance down: 1.9%, up from 2.5% in May. In this way, it adds to the poor ratings already published by the IMF.

ECLAC also downgraded the regional growth forecast for 2024 from 2.1% to 1.8%. International context According to the UN-affiliated body, it is uncertain. “Latin America and the Caribbean will face a low growth trajectory dictated by high levels of inflation and high interest rates globally,” ECLAC said.

“This situation may worsen Geopolitical and trade tensionsas well as the adverse effects of climate change,” the agency highlighted. At the regional level, growth is hampered by “the loss of housing affordability” and “the restrictive stance of monetary policy” – rates -, which affects domestic demand and discourages investment.

According to the report in the decade 2015-2024, the Latin American countries They have shown low economic growth with an average rate of 0.9%. ECLAC expects 2.3% growth in the region in 2025, the largest regional economy, ECLAC maintains GDP expansion of 2.3% for this year. Colombia’s forecast remains the same, at 1.3%. Meanwhile, Venezuela (5.0%), Chile (2.6%), Peru (2.6%), Costa Rica (4.0%), Nicaragua (1.9%), El Salvador (3.55%) and the Dominican Republic (5.2%) improved the program.

ECLAC sees Argentina’s poor growth prospects as a result of the government’s ultra-austerity policies, including tax cuts and a zero-emissions plan.

The GDP decline projections Another report by international organizations has been increasing in recent weeks. In particular, the The outlook for the International Monetary Fund worsened Argentina’s growth rate and economy are forecast to contract by 3.5% for the year, up from a 2.8% slowdown predicted in April. At the same time, inflation will rise to 140% in 2024 from 211% recorded in 2023.

These figures were released during the July update of the Global Outlook Report (known as WEO), which reviews the growth projections of member countries, following a report released last April in Washington in the context of the Spring Assembly.

“He is Financial and monetary planning “It is on track to keep inflation under control, but it has had an impact on performance as lower public spending and monetary conditions have tightened,” IMF economists explained at a briefing.

The IMF has a complicated relationship with the current government. The economic group is asking for a new deal to allow for the lifting of exchange controls, one of the current administration’s unfulfilled promises. At this time, the fund was in no rush to lend resources to the country.

In press conferences and statements, IMF officials have highlighted changes the Argentine government is making to “organize the macro.” However, in practice they do not appear to have incentives to issue new loans, and no one in the market believes a new deal will be reached this year. The IMF is asking for exchange restrictions to be lifted somehow before lending again. The company’s board of directors emphasized that “to sustain solid progress, it is necessary to improve the quality of fiscal adjustment, initiate steps towards an improved monetary and exchange policy framework, and implement the structural agenda.”