The International Monetary Fund (IMF) forecasted today that Argentina’s economy will grow 0.2 percent and have a 88 percent inflation rate in 2023 in its World Economic Outlook report. 

The projections are significantly worse than those included in the IMF staff’s fourth review of Argentina’s economic program from two weeks ago, in which it placed the country’s GDP growth at two percent and the inflation rate at 60 percent for 2023.

“The reason for the large downward revision output for 2023 is very, very clear: it’s the drought,” said Pierre-Ouliver Gourinchas, Chief Economist and Director of the IMF’s Research Department in a press conference today about the 90 percent drop in the growth forecast.

“It’s a massive drought, it’s having a huge impact on the economy, it’s expected to be transitory,” he said. “2024 is expected to be two percent, more or less on average.”

While the IMF forecasts an year-over-year 88 percent inflation, it calculates a 98.6% average price consumer increase. During the conference, journalists asked why the inflation rate projections for 2023 are below those of the Central Bank’s Market Expectations Survey (REM, its Spanish acronym), which were 109.8 percent in March.

“It’s 88 percent but, before that, in January, we were expecting it to be down to 60 percent,” Gourinchas said, referring to the jump in the IMF’s figures for inflation despite not matching Argentine projections.

“We are actually expecting inflation to stay at very high levels because underlying inflation pressures are still there,” said Petya Koeva Brooks, Deputy Director of the IMF’s Research Department. “Inflation ended last year at 94%, which is a very large number”

Koeva Brooks added that, to fight inflation, macroeconomic policies are particularly important, citing “tight monetary policy and fiscal policy” in line with the IMF-supported program.

The government and the IMF signed an Extended Fund Facility agreement in 2022 after renegotiating the US$44 billion debt former President Mauricio Macri acquired in 2018. The deal includes an economic program that Argentina must comply with in order to receive disbursements every three months, which are used to pay for the previous debt with the IMF.

The IMF’s Executive Board approved the latest review of Argentina’s program two weeks ago, allowing a disbursement of about US$5.4 billion. 

Argentina is not the only country whose growth was revised in the World Economic Outlook. The report expects global projected growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023.