Argentina's Strategic Path to Poverty Reduction through Sustainable and Inclusive Growth

Argentina: A Strategic Partner for Poverty Reduction Through Sustnable and Inclusive Growth

With a GDP estimated at around US$640 billion, Argentina ranks among the leading economies in Latin America. This country boasts remarkable natural resources, including vast energy reserves like gas and lithium, as well as exceptional arable land suitable for agriculture and livestock production. It also holds great potential in certn manufacturing sectors and innovative services within high-tech industries.

In 2023, the economy experienced a contraction of approximately 1.6, mnly due to ongoing macroeconomic imbalances alongside a severe drought that resulted in a significant drop of up to 26 in agricultural output compared to the previous year.

As part of its commitment to economic stability and recovery, Argentina embarked on a stabilization process starting in 2024. The forecast anticipates a real GDP contraction of around 3.5 for this year, largely because of macroeconomic adjustments, price realignments, and fiscal and external imbalance rectifications. By contrast, the economy is expected to grow by an estimated 5 in 2025, thanks to improved weather conditions, enhanced investments in energy sectors, and a normalization of agricultural productivity.

The stabilization program has already shown promising results on several fronts, notably in fiscal management and inflation control. As of January through September 2024, the country reported its first fiscal surplus in many years. This positive development led to a notable decline in country risk assessments, which fell from 2,100 points at the beginning of the year to just under 1,280 by October.

Meanwhile, although inflation rates remn high, they have shown considerable decreases since December 2023, with peaks reaching up to 25.5 and later settling down to a more manageable rate of around 4.2 in August 2024. To support vulnerable communities, the government implemented social protection measures that increased benefits for children and families under various income thresholds above inflation.

Argentina is currently engaged in an Exted Fund Facility EFF agreement with the International Monetary Fund IMF, spanning over 30 months. In June 2024, the IMF's Executive Board completed its eighth review of this program, which now focuses on implementing a robust fiscal consolidation plan ming to achieve a primary surplus of approximately 2 of GDP by the of 2024. This consolidation strategy, coupled with a targeted monetary stance to tackle inflation and a simplified foreign exchange FX regime, is expected to contribute significantly to an accumulation of roughly $10 billion in net international reserves.

The World Bank Group's commitment to Argentina remns steadfast as it seeks to foster sustnable development and inclusive growth by addressing poverty.

Updated: October 3, 2024
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