The OECD raises its inflation forecast for Argentina to 92% in 2022 and 83% in 2023

The Organization for Economic Cooperation and Development (OECD) raised its general inflation forecasts for Argentina in 2022 and 2023 by more than 30 points.

In an Economic Outlook report that assesses the impact of the armed conflict in Ukraine on the world economy, the OECD forecasts a general inflation rate of 83% for Argentina this year, 31.9 points above the forecast given released last June.

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The projection for the year 2023 does not offer reasons for optimism either, with an annual inflation rate of 83%, compared to the 50.6% predicted in the June report.

Of the nations included in the OECD report, Argentina is the one with the highest overall inflation rates, followed by Turkey, with 71% in 2022 and 40.8% in 2023, according to forecasts.

Like Turkey, “Argentina has had very high inflation rates for some time, and this trend will continue in 2023, even if annual inflation in the rest of the world is lower than in 2022,” the OECD noted.

In this line, inflation next year would be 83%, 32.4 percentage points more than calculated in the previous report.

Given these data, the agency pointed out that governments must align the objectives of energy security and mitigation of climate change.

“The consequences of war continue to be a threat to global food security, especially when combined with other extreme weather events resulting from climate change,” the report says.

In its World Economic Outlook report published in July, the International Monetary Fund (IMF) kept unchanged the projections on the rise in Gross Domestic Product (GDP) that Argentina will have, with a growth of 4% in 2022 and 3% for next year.

The Argentine Ministry of Economy sent to Congress the 2023 Budget project that stipulates a 2% increase in GDP for next year, in addition to 60% inflation and a decrease in the fiscal deficit from 2.5 this year to 1.9%.

ECONOMIC GROWTH

The OECD lowered Argentina’s growth forecasts for 2023 from 2.9 to 0.4%, which represents a reduction of 1.5 percentage points compared to the forecast made in June.

“Argentina’s growth projection in 2023: 0.4%,” the agency said in its report “Paying the price of war”.

With the world economy set to expand 2.2% next year, 0.6 percentage point less than in its previous forecast, the OECD attributed the slowdown in overall growth to the conflict in Ukraine, inflation, and the high price of energy.

In this context, the OECD did not modify Argentina’s growth forecasts for this year, estimated at 3.6%.

Argentina’s GDP, according to the report, will grow by 3.6% this year, as indicated in the previous forecast, but in 2023 it will register an increase of just 0.4%, compared to 1.9% that was expected before.