Inflation in Argentina reached “worrying levels”

The Organization for Economic Cooperation and Development (OECD) issued an alarming report on the Argentine economy

The Organization for Economic Cooperation and Development (OECD) issued an alarming report on the Argentine economy. According to their estimates, inflation in the country will soar even further this year, reaching a staggering 250.6%, compared to 134.5 % in 2023. In addition, the recession will deepen, with a fall in economic activity of 2.3 %, a figure significantly higher than forecast before Javier Milei’s presidential election.

In its recently released interim Outlook report, the OECD revised downward the short-term projections for Argentina. Although the country is not a member of the OECD, it is part of the G20, and the new president’s economic policies have had a notable impact.

What is most surprising is the explosion of inflation. The 250.6 % forecast for 2024 is 93.5 percentage points higher than the estimate made at the end of November. It is important to note that this represents an annual average (calculated over the 12 months), as well as the 134.5 % recorded in 2023, which reflected the acceleration of prices during the latter part of the year.

In December, prices rose by 25.5 %, and the OECD expects a similar increase in January due to the devaluation of the currency decided by the Milei government.

The OECD also notes that Argentina was the only G20 country whose Gross Domestic Product (GDP) declined in 2023, with a drop of 1 % (Saudi Arabia recorded -0.9 % and Germany -0.1 %). Unfortunately, this trend will continue in 2024, with an even greater contraction of economic activity of 2.3 %.

In summary, the economic situation in Argentina remains worrying, and the policies implemented by the new government will have a significant impact on the future of the country.

K. Tovar

Source: Bancaynegocios

(Image source: Angelica Reyes at Unsplash)

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