According to the Organisation for Economic Cooperation and Development (OECD), Argentina’s economy is anticipated to shrink by 3.3 per cent this year before rebounding with a growth of 2.7 per cent in 2025, as reported on Thursday.
The latest Economic Outlook from the OECD highlighted factors such as high inflation, necessary fiscal adjustments, and policy uncertainties which are expected to dampen private consumption and investment throughout 2024. However, the gradual easing of import restrictions and currency controls is anticipated to contribute to the recovery of domestic demand, particularly in 2025.
This forecast marks a downward revision from the OECD’s earlier Interim Economic Outlook issued in February, where a contraction of 2.3 per cent for 2024 and growth of 2.6 per cent for 2025 were predicted for Argentina.
Latin American Economies:
The OECD noted that aside from Argentina, Latin America’s highest-income countries are expected to experience moderate growth this year and the next, primarily due to weak external demand.
Seven major Latin American economies, including Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, and Peru, are projected to grow by an average of 1.4 per cent in 2024 and 2.4 per cent in 2025. These economies collectively expanded by 1.9 per cent in the previous year.
Looking ahead to 2025, the outlook for the region appears more positive, with anticipated growth driven by increased external demand and lower inflation levels within central bank target ranges. However, the report cautioned against potential negative impacts stemming from global geopolitical tensions and financial market volatility.
Furthermore, the OECD highlighted the risk of climate disasters affecting agricultural production, particularly in regions crucial for grain supplies, which could lead to price hikes in exported raw materials.
Individual Country Forecasts:
Brazil: Real GDP is projected to grow by 1.9 per cent in 2024 and 2.1 per cent in 2025, supported by robust employment growth, minimum wage increases, and declining inflation. Household spending is expected to be the primary driver of growth.
Costa Rica: GDP is forecasted to grow by 3.6 per cent in 2024 and 3.9 per cent in 2025, buoyed by monetary policy easing, expanded credit supply, and rising household incomes. Export growth is expected to moderate in 2024 but improve in 2025 with better global conditions.
Chile: Output is expected to grow by 2.3 per cent in 2024 and 2.5 per cent in 2025, driven by recovering real wages, improved business confidence, and increased export demand for minerals.
Peru: GDP growth is projected to increase to 2.3 per cent in 2024 and 2.8 per cent in 2025, supported by favorable financial conditions, reduced inflation, and government efforts to expand infrastructure.
Colombia: Modest growth of 1.2 per cent is forecasted for 2024, with an uptick to 3.3 per cent in 2025, supported by easing financial conditions and increased public infrastructure investment.
Mexico: The Mexican economy is expected to expand by 2.2 per cent in 2024 and 2.0 per cent in 2025, with consumption supported by a strong labor market and investment backed by public infrastructure projects.
