By Swann Collins, investor, writer and consultant in international affairs – Eurasia Business News. November 16, 2024. Article no 1310.
Argentina’s economic growth forecast for 2025 presents a mix of optimism and skepticism among various economic analysts and institutions.
Free market economists and libertarians think further currency and labor reforms will get the Argentine economy recovering faster. Javier Milei has already achieved to significantly lower monthly inflation.
Growth Projections
Fitch Solutions has revised its forecast for Argentina’s GDP growth in 2025 from 2.5% to 2.8%. This adjustment is based on anticipated improvements in household consumption and broader macroeconomic stability, particularly regarding currency and price stability. However, they caution that persistent capital controls and tight fiscal policies may limit a more robust recovery. This legal and tax framework could change in 2025.
The International Monetary Fund (IMF) forecasts a more optimistic rebound, predicting a 5% growth in 2025, following a contraction of 3.8% in 2024. The IMF’s projections suggest that while inflation will remain high, there are signs of gradual economic recovery.
In contrast, the OECD expects a more moderate improvement, projecting a 3.9% growth in 2025 after a 4% contraction in 2024. They note that unemployment has risen but anticipate that inflation will ease over the coming years.
BBVA Research presents an even more optimistic outlook, estimating a 6% rebound in GDP for 2025, driven by increased investment, exports, and private consumption. They highlight signs of recovery in Q3 2024 as real wages begin to rise.
GDP contracted by 3.4% in the first half of 2024. However, BBVA Research signs of recovery have been evident since Q3. The emerging rise in real wages has also begun to contribute to greater economic activity. A 4% GDP decline is expected for 2024, followed by a 6% rebound in 2025, driven by investment, exports, and private consumption.
Economic Challenges
Economists have raised concerns about the sustainability of the projected growth rates, citing inconsistencies in the government’s budget assumptions and potential obstacles such as persistent inflationary pressures and limited access to foreign currency.
The Argentinian government’s ambitious inflation targets—projecting an 18.3% inflation rate for 2025—have been met with skepticism, especially given recent trends showing higher inflation rates than anticipated.
While forecasts for Argentina’s economic growth in 2025 vary significantly among institutions—from a conservative estimate of 2.8% to an optimistic 6%—the overarching theme is one of cautious optimism tempered by significant economic challenges.
But the president Javier Milei’s principal economic argument is simple: the public sector in Argentina is too big for its own good and as such, it crowds out initiative in the private sector. State deficit must be slashed as well as public expenditures. Javier Milei has been shutting down state agencies and ministries to reduce public spendings and strengthen the Argentinian currency and gain back the confidence of private investors.
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We must keep in mind that Argentina’s annual inflation soared to 211.4% at the end of 2023, the highest in 32 years, according to figures released in January 2024 by the government’s INDEC statistics agency.
Now, thanks to the disruptive policy of Javier Milei, Argentina’s inflation slowed to 2.7% in October, the lowest level in three years in a win for the libertarian government of President Javier Milei who came to power almost a year ago promising to pull Argentina out of a dire economic crisis. When he took office in December 2023, monthly inflation surged to 25%.
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© Copyright 2024 – Eurasia Business News. Article no. 1310.
Eurasia Business News 