The coronavirus pandemic led to the Assembly of the Monetary Fund being held virtually for the second time in 2020: at the annual meeting, which begins this Monday, it will focus on how the world economy will continue with the hope that COVID- 19 left behind sometime in 2021.
The projections for the world economy, and also for Argentina, of course, will be updated this Tuesday. The previous forecast, made in June, marked a recovery of up to 5.4% average for all countries next year, with a rebound of just 3.9% for Argentina, after a estimated fall for 2020 of 9.9%.
The Government anticipates that the contraction this year sIt will be worse, 12.1%, and that next year the recovery will mark an increase in GDP of 5.5%.
In this context, the analysts consulted point out that the recovery of the world economy in 2021 could help Argentina, but that the country has certain domestic limitations that mean that next year’s improvement cannot be fully exploited.
Marcelo Elizondo stressed that in truth it is not yet known what will happen with the pandemic. “The estimate is that in the second quarter of next year the issue is relatively controlled,” he said.
“According to the estimates of the IMF, World Bank and the OECD, the economy is going to grow in the world around 5%. In other words, it will recover by the end of 2021, the situation at the end of last year ”, he mentioned.
The continent that will lead the recovery will be Asia, with India as the main economy that will see its GDP grow by 10%. “Europe will be more difficult to adapt as a period of great turmoil in technological changes is coming. The United States, whether Donald Trump wins or not, will have the capacity to recover quickly “, he described.
In the region, Latin America will be very damaged, with social and even political problems in some countries, in addition to economic ones. “Everyone talks about how, together with Africa, it will be the worst performing region, even though Brazil may do a little better ”, Held.
In this context, the world that will be in 2021, of recovery and with low interest rates, could pull Argentina, but for Elizondo there are some limitations in the country.
“From a financial point of view, there will be many funds available but Argentina will not be able to access it because it will continue to be in a very irregular situation vis-à-vis international markets. It is still very unreliable, the country risk marks it, which is almost at 1400 basis points, ”he said first.
To this aspect, he added the commercial sector, with farm products, such as soybeans, corn and wheat, as the main export components. “The recovery in Asia will help as it will demand many agricultural commodities; there is going to be an element in favor. The problem is that it has the capacity to produce: it is not a problem of demand, it is a problem of supply in order to supply as much as possible ”, he warned.
He characterized that Argentina sells very little to the rest of the world: Today it accounts for 0.3% of total world exports, and it is also in decline. In fact, the situation worsened: 50 years ago the country accounted for 0.8% of the total.
The third way through which Argentina connects with the world is also in decline. This is foreign direct investment (FDI), funds that come to invest in the country in the real economy, which is also in decline. “In the last 10 years, the stock of FDI grew 80% worldwide while Argentina decreased 18%. Those are processes that are very deep. There is a domestic issue that affects any of the three ways of internationality, “he said.
Also for the economist Roberto Bouzas, specialist in international economics, “the main blockages facing the Argentine economy have been domestic for a long time ”.
He mentioned that the combination of low interest rates and fiscal expansion are here to stay, “at least until COVID-19 and its repercussions on economies are mastered. As this is unlikely to occur in the short term, these conditions will most likely continue to be present for at least the first half of 2021 ”.
But that there is a deterioration in the international economic environment and that this “cannot be good news for Argentina.”