by Victoria Arguello
BUENOS AIRES, Dec. 19 (Xinhua) — Argentina’s economic outlook for 2019 is less optimistic, but better than the turbulence that marked 2018 in the country, a local economist said.
While the coming year “will not be the most encouraging,” the country should suffer less turbulence than it has in this year, said Pablo Salvador, who teaches at the National University of Cuyo in the central province of Mendoza.
“We expect the economy to fall, possibly beginning to recover towards the end of the year, towards the last four months, but that won’t help to turn things around, to go from being in the red to being in the black,” Salvador told Xinhua in a recent interview.
“Possibly, inflation will be much lower” than the 47 percent annual rate expected for 2018, he said.
“The government is estimating between 23 and 25 percent. Today, that seems feasible, but it all depends on how the central bank manages the situation and how the government manages policy,” he added.
Since the start of the year, the peso lost more than half its value against the U.S. dollar and “the dollar could continue to strengthen,” he noted.
On the bright side, thanks to a weaker peso, “Argentina’s economy has become more competitive” as “exports have begun to recover and imports have decreased substantially,” said Salvador.
“That is changing the trade balance little by little, and certainly next year we are going to have a positive trade balance. That means there will be real dollar earnings … from the export sector,” he added.
Controlling inflation will be essential to maintaining competitivity, to continue boosting exports so a favorable trade balance serves to spur Argentina’s economy, said the economist.
To cover its debts as its currency devalued, Argentina’s government earlier this year turned to the International Monetary Fund, which agreed to a more than 50-billion-U.S.-dollar bailout, the biggest in the global lender’s history.
Argentina also raised its interest rate to a whopping 60 percent in an attempt to prevent capital flight.