RIO DE JANEIRO, BRAZIL – The OECD (Organization for Economic Cooperation and Development) improved Argentina’s economic outlook in an uncertain scenario marked by the emergence of a new variant of coronavirus called Omicron.
After the World Health Organization (W.H.O.) warned about the rapid spread from Africa to other European countries, Argentina seems to be one of the countries with a better economic outlook in the region if predictions come true.
In Latin America, one of the regions most shaken by the coronavirus, the OECD upgraded Argentina’s outlook from that of September, with activity rising 8% in 2021 (up four-tenths) and 2.5% in 2022 (up to six tenths). The OECD considers that significant fiscal adjustment remains a crucial factor for Argentina.
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Also, according to the agency, the efficiency of public spending could be improved, including by reducing public employment and subsidies while preserving “well-targeted” social spending.
The authors of the report are at pains to stress that in the face of significant imbalances in the recovery by country (low-income countries have lost the most since the outbreak of the crisis), the big priority continues to be vaccination, which is what will save lives, maintain incomes, keep borders open and lift restrictions.
At the same time, they slightly cut their forecast for global growth in 2021. The world economy could grow by 5.6% this year, a 0.1 point drop compared to its previous forecast made in September.
The agency noted the existence of “very different economic realities” between different regions and estimated that “recovery will remain precarious” as long as vaccines are not distributed worldwide.
“Striking imbalances have emerged,” the Paris-based agency stressed. For the OECD, these gaps reflect inequalities in health systems, public policies, the difficulties of workers in some sectors, and a rise in prices that is being sustained for longer than had been projected.
This report does not contain estimates on the emergence of the omicron variant, detected a few days ago and whose consequences for the world economy are still uncertain. However, they warned that it “may pose a threat to the recovery” of the world economy.
PROJECTIONS FOR THE REGION
Meanwhile, projections for activity in 2022 remain in line with their previous forecasts of a 4.5% expansion. For the Eurozone, the OECD projected a slight cut in its growth forecast for 2021 to 5.2%, and for the United States, the OECD again revised its projections, estimating the growth of 5.6% for this year and 3.7% for next year.
For Brazil, the OECD cut its forecasts for 2021 by 0.2 points, predicting growth of 5%, with a gloomier outlook than in its previous report for next year, with a projected expansion of 1.4%, i.e., 0.9 pp less. Mexico and Brazil are the countries that will see the most inflation rebound this year.
Colombia will be the country with the highest growth by 2022 (5.5%), followed by Costa Rica (3.9%), Chile (3.5%), Mexico (3.3%), Argentina (2.5%), and Brazil (1.4%).