The International Monetary Fund, in line with most international organisations and the Mauricio Macri administration, continues to assure that after years of stagnation and recession, Argentina has entered a path of economic growth.

However, the latest issue of the organisation’s World Economic Outlook (WEO) report — where the fund presents its analysis and projections for economic development for the world and specific countries in particular — estimates that the country’s economic growth will be smaller, and the inflation rate will be higher, than what the government expects.

When it comes to Argentina’s economy, the IMF projects that the GDP will grow by 2.2 percent in 2017. This number represents a 0.5 percent drop compared to the expectations the organization had previously had for the country last October, and is 0.8 percent lower than the 3 percent growth that government officials assure the country will reach. On their end, private analysts and consulting firms on average estimate that the number will actually clock in at 2.8 percent, Infobae reports. In this same report, the IMF also predicts that the economy will grow by 2.3 percent in 2018.

The organisation also differs with the government over how high this year’s inflation rate will be. The IMF predicts that the rate will come in around 21.6 percent, significantly higher than the government’s goal to keep it between 12 and 17 percent. It estimated that only in 2018 the inflation will drop to 18.7 percent.

However, the government is still assuring everyone that it will meet its goal. Last week, after the Indec stats agency revealed that inflation had reached 2.4 percent in March, Central Bank (BCRA) President, Federico Sturzenegger, increased the bank’s interest rates by a point and a half — from 24.75 to 26.25 percent — in an attempt to take money out of circulation and lower inflation. At the same time, however, this decision could affect economic growth.

Sturzenegger. Photo via Télam Buenos Aires 12/06/2012 El presidente del Banco Ciudad, Dr. Federico A. Sturzenegger asistió como invitado a la reunión de la comisión de Justicia de la Cámara de Diputados, que comienza a analizar el proyecto que propone que los depósitos judiciales de los tribunales nacionales y federales en todo el país se efectúen en el Banco de la Nación Argentina. Foto: Fernando Sturla/Télam/aa
Sturzenegger. Photo via Télam

When presenting the BCRA’s monthly report on monetary policy yesterday, Sturzenegger assured reporters that “it’s completely possible to reach the inflation goal of 12 – 17 percent for the year,” because “inflation will drop in the second semester” of the year. When consulted on the different analyses made by private economists and business leaders, and the result of his decision to increase the interest rates, he said that “there’s nothing that will reactivate the country’s economy more than to consolidate the process of disinflation [which is not the same as deflation].”

“Be careful about thinking that the 24 or 26 percent rate looks attractive with a static exchange rate. That rate is actually not real, because the number is annual and if inflation actually drops, the rate will drop as well. It’s what happened last year when the rates began the year at 38 percent but ended it around 24,” he said.

As for economic growth, Sturzenegger went on to say that “we estimate that the GDP grew 0.7 percent in the first quarter of the year, and as the inflation rate drops, the growth goals will follow suit.” We’ll see who gets closer to the real number as the year progresses.