Argentina needs export momentum to emerge from recession

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The Organization for Economic Cooperation and Development (OECD) estimated Tuesday that the Argentine economy will be able to recover thanks to exports, although it predicted that the country’s GDP will fall 1.8% this year.

“Given that domestic demand remains weak, is expected to be exports, which will boost the recovery and that throughout 2019, the quarterly growth rates return to positive territory”, said the agency, which comprise 36 nations and has its headquarters in Paris.

However, the OECD considered that ” the decline in international trade flows could limit global demand for Argentine exports”

In addition, it estimated that Argentine GDP will fall 1.8% during 2019, one tenth less than that expected in November last year.

However, the agency revised its forecast for 2020 downwards: during that year it estimated that the Argentine economy will have left the recession” with ease”, to grow by 2.1%.

In this context, OECD considered that in Argentina “further progress is needed with structural reforms to improve productivity, boost exports and strengthen growth. Competition remains low in many sectors, due to domestic restrictions on the entry of companies, obstacles to entrepreneurship and restrictions on imports.”

“The decline in consumer prices that would result from closer domestic and foreign competition would improve the purchasing power of households, especially those with low incomes. Better access to intermediate inputs would increase the productivity and competitiveness of domestic producers, allowing companies to create formal and better paid jobs,” he added.

However, he assessed that there are threats that put the country’s recovery at risk, such as “contractive macroeconomic policies and political uncertainty in the face of the October 2019 elections.”

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