Argentina’s GDP to contract by 3.3% in ’24, grow 2.7% in ’25: OECD
Argentina’s economy is expected to contract by 3.3 per cent this year, before growing by 2.7 per cent in 2025, said the Organisation for Economic Cooperation and Development (OECD) on Thursday.
“High inflation, a sizeable but necessary fiscal adjustment, and policy uncertainty will weigh on private consumption and investment for most of 2024. The gradual lifting of import restrictions and currency controls will eventually boost the recovery of domestic demand, particularly in 2025.” OECD’s latest Economic Outlook read.
The latest forecast marks a downward revision from OECD’s Interim Economic Outlook issued in February, in which the Paris-based organisation predicted the Argentinian economy to contract by only 2.3 per cent in 2024 and to grow by 2.6 per cent in 2025.
Latin American Economies
Aside from Argentina, OECD said Latin America’s highest-income countries are projected to grow moderately this year and next because external demand will remain weak.
It said seven main Latin American economies would grow on average by 1.4 per cent in 2024 and 2.4 per cent in 2025.
The seven countries – Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico and Peru – expanded 1.9 per cent last year.
“In 2025, the outlook for the region has a more positive tone, associated with greater growth in external demand, and lower inflation, already within the target ranges of central banks,” the OECD report read.
However, it warned: “Global geopolitical tensions and volatility in global financial markets could have a negative impact on the region.”
Moreover, climate disasters could impact agricultural production in a key region for grain supplies, the report added, pushing up prices of raw materials, many of which are exported.
Brazil
Real GDP is projected to grow by 1.9 per cent in 2024 and 2.1 per cent in 2025. Boosted by robust employment growth, minimum wage increases and diminishing inflation, household spending is expected to be the main engine of growth, particularly in 2024.
“Despite recent signs of a rebound, continued external uncertainty will keep private investment subdued throughout 2024. Inflation, which declined continuously throughout 2023, is projected to continue to converge towards the target during 2024 and 2025.”
Costa
GDP will grow by 3.6 per cent in 2024 and 3.9 per cent in 2025. “Monetary policy easing, credit supply expansion and increases in households’ income will support domestic demand. Export growth is expected to moderate in 2024 and edge up in 2025 as global conditions improve. Headline inflation is expected to rise to 0.4 per cent (year-on-year) in 2024 and 2.2 per cent in 2025.”
Chile
“Output is projected to grow by 2.3 per cent in 2024 and 2.5 per cent in 2025. A recovery in real wages helped by falling inflation and looser financial conditions will support a recovery in consumption over 2024-25.”
“Business confidence has improved, but stagnant credit will continue to restrain investment growth during 2024. Global demand for minerals will underpin export growth in 2024-2025. Inflation will converge to the 3 per cent target in mid-2025.”
Peru
GDP will pick up to 2.3 per cent in 2024 and 2.8 per cent in 2025, buoyed by more favourable financial conditions and reduced inflation that will bolster domestic demand.
“Central government efforts to expand infrastructure, coupled with a faster execution of public investment projects by subnational governments, will support investment. A gradual employment recovery will stimulate private consumption.”
Exports are expected to be sustained by a rebound in tourism, fishing, and agricultural production as the impact of El Nino climate phenomenon dissipates. Inflation will slow further, converging gradually to the midpoint of the target range of 2 per cent by the end of 2024.
Columbia
The economy is expected to undergo another year of modest growth, forecast at 1.2 per cent in 2024, before picking up to 3.3 per cent in 2025.
“Total investment is expected to recover partially as financial conditions ease, but uncertainty will continue to put a drag on private investment. Inflation is slowing gradually but remains high and will only fall within the target range in the latter half of 2025.”
Mexico
The Mexican economy is projected to expand by 2.2 per cent in 2024 and 2.0 per cent in 2025.
“Consumption will be supported by a strong labour market. Investment will be backed by public infrastructure projects in 2024 and by the gradual nearshoring of manufacturing activities to Mexico. Exports will support growth in 2025, after losing some dynamism in 2024 due to the slowdown in United States. Inflation will continue to gradually edge down to 3.1 per cent in 2025.”
