According to a report released on Tuesday, the International Monetary Fund (IMF) revised Argentina’s growth projection for 2023 — which it calculated to be 0.2% in April — to negative 2.5%. 

“That was a fairly significant downward revision,” Petya Koeva Brooks, Deputy Director of IMF’s Research Department, said in a press conference. “And pretty much the reason for that […] was the drought.”

A historic drought is expected to slash between US$18.5 and US$20 billion in agricultural exports this year, amid an international reserve scarcity crisis — international reserves are calculated to be negative US$7.3 billion.

Chief Economist and Director of the IMF’s Research Department Pierre-Olivier Gourinchas listed Argentina’s drought and this year’s floods in Pakistan as examples of the impact of the climate crisis. 

“We are seeing more extreme climate events and some of these can have strong macroeconomic consequences,” Gourinchas said at the conference.

The recalculated projections are featured in the IMF’s July Global Economic Outlook report. The document said that the global economy will grow 3% this year, a 0.2 percentage-point increase from the lender’s April report.

The IMF report placed Argentina’s economic growth at 2.8% next year.

“The agricultural production and its revival are also what’s behind the projected rebound of growth in 2024,” said Brooks. 

The Fund also revised the country’s projected inflation for the entire year to 120% — from 88% in April. Brooks said that the new figure would require “moderation” of inflation rates which, according to her, depends on Argentina’s ability to stick to the Fund-sanctioned economic program, for which tense renegotiations between the country and the lender are taking place. 

On Sunday midday, the IMF announced that it agreed on primary objectives for a new staff-level agreement with Argentina. However, the speakers at Tuesday’s conference left journalists’ questions about the upcoming agreement unanswered.

“This requires some moderation in the inflation rates in order to reach this 120 — and again, predicated on tight macroeconomic policies,” Brooks added, before closing the Argentine chapter of the conference. “Let me stop here.”