BUENOS AIRES, Argentina (Reuters) — Argentina’s economy will return to growth in 2019, President Mauricio Macri said on July 18, following a year marked by higher-than-expected inflation and a run on the peso that many economists say will lead to a recession.
The turbulence prompted Argentina to turn to the International Monetary Fund for a $50 billion financing deal, and Macri said the government was still weighing several options to boost revenue and reduce spending to meet the fiscal deficit targets outlined in the agreement.
“Clearly the levels of growth that we are coming from are going to diminish,” Macri said in a news conference at the Olivos presidential residence. “There will be a few months in which the steps that we have taken have to mature, but we will return to growth next year.”
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Last year, 2.9 percent growth helped lift Macri’s market-friendly coalition to victory in October’s congressional elections. The economy has slowed this year due to a slump in farm output following a severe drought and a currency crisis triggered by a selloff in emerging market assets combined with doubts about the government’s ability to reduce inflation.
The IMF expects Argentina’s economy to shrink in the second and third quarters of 2018. As part of the deal, Argentina agreed to slash the primary deficit to 1.3 percent of gross domestic product, down from its prior 2.2 percent goal.
The IMF said Argentina could improve its finances by delaying implementation of tax reform and modifying a plan to reduce soybean export taxes. Government officials have said they would consider the former but that Macri has ruled out the latter.
