IMF sees Argentine economic recovery starting in Q2

BUENOS AIRES: Argentina’s deepening recession will continue through the first quarter before the economy sees a sustained and gradual recovery, the International Monetary Fund said, while outlining a long list of threats to that rebound.

“The bottom – the floor – is going to be in the first quarter,” mission chief Roberto Cardarelli told journalists in Buenos Aires on Saturday.

“We believe the recovery will begin in the second quarter.”

Cardarelli is in Buenos Aires all week for a scheduled review of the IMF’s US$56.3bil bailout for Argentina’s economy.

The deal was initially struck in June, then revised in September when market jitters forced IMF officials to speed up the pace of disbursements.

While forecasting that the economy will start to pick up later next year, Cardarelli acknowledged challenges ranging from a broad emerging market selloff to next year’s presidential election to tighter US monetary policy.

“There are a lot of risks,” Cardarelli said.

“One threat is “that inflation doesn’t come down as soon as we expect, then there’s a necessity for a more restrictive monetary policy for more time.”

The IMF forecasts Argentina’s economy will contract 1.6% in 2019, more than the 0.5% predicted by the government.

Cardarelli said the difference lies in views over economic activity in the second half of this year, but he notes that both sides agree on the timing of the recovery.

As part of the revised deal with the IMF, Argentina’s central bank pledged to freeze the amount of pesos in circulation until at least June. — Bloomberg