OECD Forecasts Upturn for Argentine Economy by 2025, Brazil’s Outlook Remains Stable

The Organization for Economic Cooperation and Development (OECD) forecasts a challenging economic trajectory for Argentina in 2024, followed by a more promising outlook for 2025, as outlined in a report released today. Conversely, Brazil’s economic forecast remains relatively stable compared to the previous report issued by the organization in November last year.

The OECD monitors and projects the economic performance of seven Latin American countries, including Brazil, Argentina, Mexico, Chile, Colombia, Costa Rica, and Peru. The average growth projection for these economies is estimated at 1.4% in 2024 and 2.4% in 2025.

Aida Caldera, the head of the OECD Department of Economics, highlighted the region’s moderate growth prospects during a press conference presenting the report. She emphasized the challenges posed by high levels of public debt and a complex international landscape. However, she expressed optimism for a more positive 2025, driven by increased external demand and lower inflation.

The OECD projects a 1.9% growth rate for the Brazilian economy in 2024, slightly higher than the 1.8% forecast at the end of the previous year. This modest improvement is attributed to positive developments in the job market, wage growth, and declining inflation rates. The Focus Bulletin, released on Tuesday (30), aligns closely with the OECD’s projections, predicting a 2.02% growth in the Brazilian economy for 2024 and a 2% increase for 2025 and 2026.

The implementation of tax reforms in Brazil is cited as a contributing factor to the slightly improved growth outlook for 2024. The OECD views these reforms as potentially enhancing productivity and growth opportunities for companies. However, the organization emphasizes the need for the government to ensure fiscal responsibility to maintain public confidence and facilitate the successful adoption of the reforms.

In contrast, Argentina’s economic outlook remains negative for 2024, although there are signs of improvement for 2025. The OECD predicts a 3.3% contraction in the Argentine economy in 2024, a significant downturn from the previously forecasted 1.3% decline. However, the outlook for 2025 has improved, with the growth forecast revised from 1.9% to 2.7%.

High inflation, fiscal adjustments, and political uncertainty are cited as major challenges facing Argentina in 2024. The OECD anticipates that these factors will dampen private consumption and investment. However, ongoing adjustments throughout the year are expected to lay the groundwork for growth in 2025.

The OECD cautions that Argentina’s economic landscape is fraught with challenges, including low foreign reserves, currency restrictions, and high inflation. These factors could lead to currency devaluations and prolonged recessions if not addressed promptly. Slow progress in implementing reforms could further delay economic recovery.

Forecasts for other Latin American countries have also been revised downward due to economic uncertainties. Mexico’s growth projection for 2024 has been adjusted to 2.2%, down from the previous forecast of 2.5%, with the slowdown attributed to decreased economic activity in the United States. Meanwhile, Colombia is expected to grow by 1.2% in 2024 and 3.3% in 2025, with Chile forecasted to see a 2.3% increase this year and a 2.5% rise in 2025.

Source: Valor Econômico

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