The International Monetary Fund said on Tuesday it is now projecting Argentina's economy will contract 2.5% in 2023, with a year-end inflation rate of about 120%, largely due to a crippling drought that has curtailed agricultural production.
"Argentina is facing a very difficult situation particularly that's made worse by the drought, the agricultural drought it has been facing in the last year or so," IMF chief economist Pierre-Olivier Gourinchas told a news conference.
The Argentina forecast, a steep downgrade from an April projection of 0.2% growth in 2023, stands in stark contrast to a slightly improved outlook for global growth in the IMF's latest World Economic Outlook projections.
Gourinchas declined to comment on how the forecasts may affect negotiations with Argentina over its $44 billion IMF loan program. The Fund said on Sunday that the basis of a staff-level agreement may be reached in coming days, while Argentina's government unveiled tax and currency measures that would effectively devalue the peso.
IMF deputy research director Petya Koeva-Brooks said the inflation projection of 120% would require some moderation of inflation rates and would require implementing macroeconomic policies agreed between the IMF and Argentina.
