So much so that the United States Federal Reserve (Fed) raised the rate by 75 points in September and expects another sharp rise this year.
At the domestic level, the Central Bank raised its reference rate on September 15 by 550 basis points to 75% annual nominal rate, seeking to deal with high inflation and sterilize market pesos.
It should be noted that the Argentina is the fourth country with the highest inflation in the world behind Sudan, Venezuela and Zimbabwe, according to Ámbito based on data from the IMF.
This Tuesday, the IMF estimated that the world economy will grow 3.2% this year, almost half that in 2021, and warned that “the worst is yet to come” in 2023. Meanwhile, the agency projected that the Argentine GDP will fall from 4% in 2022 to 2% in 2023.
“The world economy continues to face great challenges, due to the persistent effects of three powerful forces: the Russian invasion of Ukraine, a cost-of-living crisis caused by persistent and growing inflationary pressures, and the slowdown in China,” the agency assessed through its report on Global Economic Perspectives, which was presented this Tuesday in Washington.
Presented by Pierre-Olivier Gourinchas, economic advisor to the Monetary Fund, the report warned that “more than a third of the world economy will contract in 2023, while the three largest economies, the United States, the European Union and China, will remain stagnant. . In short, the worst is yet to come, and for many people 2023 will feel like a recession.“.
In that sense, he indicated that the Russian invasion of Ukraine “continues to powerfully destabilize the global economy. Beyond the increasing and senseless destruction of lives and livelihoods, it has led to a serious energy crisis in Europe, which is drastically increasing costs of living and hampering economic activity.
He also considered that “persistent and growing inflationary pressures have triggered a rapid and synchronized tightening of monetary conditions, together with a powerful appreciation of the US dollar against most other currencies.”
We expect global inflation to peak at the end of 2022, but to remain elevated for longer than previously expected, declining to 4.1% by 2024.
Regarding Argentina, The IMF maintained its growth forecast of 4% this year and 2% for the next, with inflation of 95% in 2022 and 60% in 2023.
Meanwhile, unemployment will be 6.9% this year and next, below the level of Brazil, Colombia, Paraguay and Uruguay.
The Fund stressed that the external environment “is already very difficult for many emerging market and developing economies. The strong appreciation of the US dollar adds significantly to domestic price pressures and the cost of living crisis for these countries. Capital flows have not recovered and many low-income and developing economies remain in debt distress.
“The appropriate response in most emerging and developing countries is to calibrate monetary policy to maintain price stability, while allowing exchange rates to adjust, and to hold onto valuable foreign exchange reserves for when financial conditions really can get worse,” he added.
Source: Ambito
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