Argentina Trapped in a Whirlwind Recession: Analysts
April 3, 1999 - 0:0
BUENOS AIRES Economists here share a grim outlook on Argentina's economic figures this year, predicting a certain slump in Gross Domestic Product as the country grapples with a spiraling recession. Market analysts say the country's debt and deficit were bound to grow in 1999 while the recession would continue to expand. After predicting growth, the Argentine government recently admitted it actually expected the GDP to fall by one or two percent.
But this negative projection is optimistic compared to the bleak prognosis of the private sector, which sees the GDP losing three to four percent. Most analysts warn that Argentina's economy could fare worse this year than it did in 1995, when the GDP plunged by 4.6 percent and the unemployment rate topped 18 percent. Anxiety among economists and government officials is mounting as the date of a visit from the International Monetary Fund (IMF) approaches.
The IMF inspectors are due to arrive here Monday. The government struck a deal with the IMF not to go above a 3.3 billion dollar deficit. But the figure is likely to reach more than 6.5 billion dollars this year, said the Argentina Century 21 Foundation, headed by leading economists Daniel Montamat and Marta Barros. And the country's largest independent institute of financial studies the Capital Foundation warns that the fiscal problem is worse than it appears.
In addition to the 'official' deficit announced for 1998 (some four billion dollars), the public debt rose that same year by 12 percent to reach 112 billion dollars, the Capital Foundation said. Some firms, such as the privately-owned Credicoop Bank, blame the widening recession on a policy vacuum on how to deal with the financial crisis. The spillover from Brazil's economic downfall is far from being the only cause of the recession, the bank stressed.
Talks with the IMF next week will determine whether the Argentine government can increase taxes to help reduce the deficit. Meanwhile, Cabinet Chief Jorge Rodriguez told reporters Tuesday that the administration hoped to cut public expenses by 1.5 billion dollars in an effort to confront the crisis. Despite these measures, a wave of criticism is pounding Argentina's political leaders. Agricultural producers are planning a four-day strike, while the industrial and commercial sectors demand urgent economic incentives.
And the outlook of leading financial analysts is doing little to assuage their fears. The economic recession is worse than the one that struck during the 'Tequila' effect in 1995 and it will not lose ground in mid-year, says the Latin American Foundation of Economic Studies (FIEL). Economist Manuel Solanet noted that policy-makers are becoming more realistic about growth figures, which is why they are now projecting a decline, as several analysts had already done.
(AFP)
But this negative projection is optimistic compared to the bleak prognosis of the private sector, which sees the GDP losing three to four percent. Most analysts warn that Argentina's economy could fare worse this year than it did in 1995, when the GDP plunged by 4.6 percent and the unemployment rate topped 18 percent. Anxiety among economists and government officials is mounting as the date of a visit from the International Monetary Fund (IMF) approaches.
The IMF inspectors are due to arrive here Monday. The government struck a deal with the IMF not to go above a 3.3 billion dollar deficit. But the figure is likely to reach more than 6.5 billion dollars this year, said the Argentina Century 21 Foundation, headed by leading economists Daniel Montamat and Marta Barros. And the country's largest independent institute of financial studies the Capital Foundation warns that the fiscal problem is worse than it appears.
In addition to the 'official' deficit announced for 1998 (some four billion dollars), the public debt rose that same year by 12 percent to reach 112 billion dollars, the Capital Foundation said. Some firms, such as the privately-owned Credicoop Bank, blame the widening recession on a policy vacuum on how to deal with the financial crisis. The spillover from Brazil's economic downfall is far from being the only cause of the recession, the bank stressed.
Talks with the IMF next week will determine whether the Argentine government can increase taxes to help reduce the deficit. Meanwhile, Cabinet Chief Jorge Rodriguez told reporters Tuesday that the administration hoped to cut public expenses by 1.5 billion dollars in an effort to confront the crisis. Despite these measures, a wave of criticism is pounding Argentina's political leaders. Agricultural producers are planning a four-day strike, while the industrial and commercial sectors demand urgent economic incentives.
And the outlook of leading financial analysts is doing little to assuage their fears. The economic recession is worse than the one that struck during the 'Tequila' effect in 1995 and it will not lose ground in mid-year, says the Latin American Foundation of Economic Studies (FIEL). Economist Manuel Solanet noted that policy-makers are becoming more realistic about growth figures, which is why they are now projecting a decline, as several analysts had already done.
(AFP)