Argentina expects slowing growth in 2023 and high inflation

Argentina, after the recovery of its economy mainly due to the lifting of restrictive measures imposed to control the new coronavirus pandemic, expects that in 2023 there will be a sharp slowdown in the rate of growth, to 2%, while inflation will decrease. , but it will remain high, around 60%, according to the rough lines of the draft state budget presented yesterday Wednesday by the Minister of Economy.

At the same time, the six-monthly figures on poverty, published yesterday by the National Institute of Statistics (Instituto Nacional de Estadística y Censos, INDEC), show that although it decreased, it continued to affect 36.5% of the population in the first half of the year, compared to 37 .3% in the second half of 2021.

In contrast, extreme poverty increased by 0.6% and affects 8.8% of the population, or in other words 2.6 million Argentine citizens, who are unable to “fill the basic food basket” with their income them, INDEC emphasized.

The panorama, however, shows a noticeable improvement compared to the period of the paralysis of activity due to the pandemic, when poverty affected 42% of Argentines and extreme poverty 10.5%, in the second half of 2020.

The INDEC survey was conducted in 31 urban centers, representing 29 million inhabitants, not all of Argentina’s 47 million citizens. But it offers an overall picture, it is considered to reflect the situation throughout the country.

According to INDEC, poverty affects more than half of the population (50.9%) under the age of 14, also down from a year ago (54.3%).

In parliament, Economy Minister Sergio Massa presented to a competent committee the state budget plan, which he described as “realistic”, insisting on the need to “improve the world’s quality of life (…) with development without social exclusions”.

Despite a post-pandemic resurgence in activity and a drop in unemployment from 9.6% to 6.9% in a year, poverty has not fallen drastically. Partly because the jobs on offer are precarious or informal, partly because wages have not kept pace with chronic inflation, which reached 56.4% in the first eight months of 2022 and the central bank predicts will hover around 90% in late of 2022.

Compared to the spectacular recovery after the lifting of measures to limit the pandemic (10.3% growth in 2021), the dynamism of the economy in 2023 is expected to continue to know the slowdown observed this year. In 12 months, GDP growth was 6.4% and the International Monetary Fund (IMF) predicts that Argentina will close 2022 with 4% growth.

However, Mr. Massa estimates that Argentina will be able to reduce its budget deficit to 1.9% of GDP, as defined in the goals of the agreement with the IMF for the debt restructuring of the Latin American country.

RES-EMP

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