(Bloomberg) — Argentina will face a severe recession and triple-digit inflation rates next year with major economic policy adjustments that Libertarian President-elect Javier Milei promised after winning Sunday’s election, according to the Institute of International Finance.
“A painful recession in 2024 is inevitable, regardless of the prevailing political framework,” Martín Castellano, head of Latin American studies at the institute, wrote in a study note published Monday. Argentina’s economy is forecast to contract by 1. 3% in 2024. , after a 2. 4% drop this year.
Subscribe now to read the latest news in your city and across Canada.
Subscribe now to read the latest news in your city and across Canada.
Create an account or log in to continue your experience.
Don’t have an account? Create an account
Inflation will most likely remain above 100 percent with an “inevitable” depreciation of the currency, Castellano predicts.
Read more: Milei faces 143% inflation to win Argentina’s presidency
Milei, an economist with little experience in governance, won a wider-than-expected victory over Economy Minister Sergio Massa in a race marked by voter anger over the inflationary spiral of more than 11 points.
He promised a swift policy update in his first speech as president-elect, telling Argentines that gradualism is not an option. But Milei has backed away from his more radical proposals, adding plans to update the peso with the U. S. dollar and abolish the central bank.
Milei has also pledged to massively cut spending to reduce budget deficits, and his landslide victory reflects a “strong public mandate to pursue economic stability,” according to the institute. But he believes energy and commodity prices may rise. exports and provoke the new government to opt for moderate adjustments that can garner more political support.
“Complacency is a primary for 2024,” Castellano added.
Argentina’s U. S. -listed stocks soared after Milei’s victory, and shares of state-run oil company YPF jumped 43% on bets that the maverick loser would withstand years of disastrous policies. Analysts are still waiting for the number of cabinet members, a timetable for the removal of currency controls and an imaginable rewrite of Argentina’s debt deal with the International Monetary Fund.
“Progress would possibly be slower and slower than expected,” Castellano wrote.
Postmedia is committed to maintaining a civilized discussion forum and encourages all readers to share their perspectives on our articles. It can take up to an hour for comments to moderate before appearing on the site. We ask that your feedback be applicable and respectful. We’ve enabled email notifications: you’ll now receive an email if you get a response to your comment, if there’s an update to a comment thread you’re following, or if a user you follow comments. Check out our network rules for more facts and main points on how to adjust your email settings.
365 Bloor Street East, Toronto, Ontario M4W 3L4
© 2023 Windsor Star, a department of Postmedia Network Inc. All rights reserved. Unauthorized distribution or transmission is strictly prohibited.
This uses cookies to personalize your content (including ads) and allows us to analyze our traffic. Learn more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.