The OECD sharply raised its inflation forecast for Argentina in 2024, to 250.6% against 157.1% expected in November, in the wake of a surge in prices at the end of last year after the arrival to power of anarcho-capitalist president Javier Milei. Inflation in Argentina “accelerated at the end of 2023, which suggests a strong carry-over effect for average annual inflation in 2024”, explained the OECD in a report published Monday, in the middle of the debate parliamentarian in this country on a series of controversial deregulatory reforms.
Towards controlled inflation within “12 to 24 months”?
Price increases accelerated sharply in December in Argentina, to 25.5%, after a devaluation of more than 50% of the peso by the new leader to stabilize the economy plagued by chronic inflation and debt. Over the whole of 2023, it reached 211.4%, a multi-decade high. “Turkey and Argentina are exceptions,” the Organization for Economic Co-operation and Development continued, “as their significantly higher inflation rates result from the previous accommodative stance of macroeconomic policies.”
After coming to power, President Milei warned that things “were going to get worse” initially for the Argentine economy, with “stagflation”, a stagnation of activity combined with high inflation, in 2024. Javier Milei, a 53-year-old economist who describes himself as an “anarcho-capitalist”, has shaken up Argentine politics in two years of rapid rise, going from deputy in 2021 to president in November 2023. According to him, inflation could be brought under control by here “12 to 24 months”.
Growth is declining… before a rebound from 2025
The director of the International Monetary Fund (IMF), Kristalina Georgieva, said on Wednesday that the Argentine government was taking “bold steps to restore macroeconomic stability and begin to tackle obstacles to growth.” This did not prevent the Washington institution, which forecast 2.8% growth in Argentina in 2024, from revising its forecasts on Tuesday and projecting a recession of 2.8% in Latin America’s third largest economy under the effect of austerity measures. The country would thus be the only one in the G20 in recession in 2024.
The OECD also forecast on Monday a stronger recession than previously anticipated in Argentina, at 2.3% this year compared to a previous estimate of 1.3%. The rebound is expected in 2025 with growth of 2.6% according to the OECD and 5% according to the IMF.