92
Argentina Following an economic slowdown at the end of 2022, GDP is expected to contract by 1.6% in 2023 and then recover by 1.1% in 2024. The labour market has improved, but the coming recession is expected to bring a drop in employment. Exports are suffering from a severe crop drought in 2023 but will recover in 2024. Inflation surpassed 100% and will remain high in the short term, despite a slightly less expansionary fiscal stance. Tight capital controls and policy uncertainty ahead of the October 2023 elections will hold back investment and consumption in 2023. Public spending will rightly fall during 2023, as energy subsidies are scaled back and compliance with fiscal targets requires further spending restraint. A continued reduction in transfers from the central bank to the treasury should reduce inflationary pressures in the medium term, narrow the gap between the official and the parallel exchange rates and lower the risk of a sudden devaluation. Stabilising the macroeconomic situation and lowering inflation will be crucial to reduce high poverty and address mounting social pressures. Growth is weakening Output contracted in the last quarter of 2022, mainly driven by a decline in investment and private consumption. Short-term indicators point to a further contraction during the first half of 2023, as agricultural production is affected by a severe drought. Unemployment has returned to pre-pandemic levels, reaching 6.3% in the fourth quarter of 2022, although informality has increased sharply, approaching 40% of the labour force. Consumer confidence has declined. Headline inflation rose to 108.8% in the year to April, the highest level in over 30 years, amid a widening gap between the managed official and the parallel exchange rates. With no formal anchor for inflation expectations, inflation is broad-based, and core inflation is at 105%.
Argentina
Source: CEIC; Instituto Nacional de Estadísticas y Censos; OECD Exchange rate database; Central Bank of Argentina; and Ambito.com. StatLink 2 https://stat.link/7lbwkr
OECD ECONOMIC OUTLOOK, VOLUME 2023 ISSUE 1: PRELIMINARY VERSION © OECD 2023