The Organisation for Economic Cooperation and Development (OECD) predicted today that Argentina's economy will be able to recover from its deep recession thanks to exports, although they also predicted that GDP will nonetheless contract by 1.8 percent this year.
"Given that domestic demand remains low, it is expected that exports will drive the recovery and that, throughout 2019, quarterly growth rates will return to positive territory," said the agency, which is made up of 36 nations and based in Paris.
However, the OECD noted that "the decrease in international trade flows could limit the global demand for Argentine exports.”
The estimation that the Argentine GDP will fall by 1.8 percent during 2019 is one-tenth less than the organisation had originally foreseen in November of last year. The agency also revised its forecast for 2020, now estimating that the country’s economy will leave the recession behind "with ease,” to grow by 2.1 percent.
The OECD said that in Argentina, "it is necessary to move forward with structural reforms to improve productivity, boost exports and strengthen growth. Competition remains scarce in many sectors, due to domestic restrictions on the entry of companies, obstacles to entrepreneurship and restrictions on imports.”
"The decrease in consumer prices that would be obtained through closer domestic and foreign competition would improve the purchasing power of households, especially those with low income. Better access to intermediate inputs would increase the productivity and competitiveness of national producers, allowing companies to create formal, better-paying jobs," they added.
However, the agency assessed that there are threats that put the recovery of the country at risk, such as "macroeconomic policy contractions and political uncertainty in the face of the October 2019 elections.”
The "Argentina and OECD Action Plan" was first presented to the representatives of the member countries back in April 2017 by Finance Minister Nicolás Dujovne. Argentine leaders spoke about the progress and fundamentals of the project that would bring Argentina into the forum, which facilitates 75 percent of foreign direct investment and 60 percent of trade globally.
The Centre for Strategic and International Studies (CSIS), an influential think tank based in Washington, supported the entry of Argentina into the OECD and urged its member countries to reach consensus so that the country can get the "green light."
According to the CSIS, “Argentina needs strong external support from OECD member states, including their governments, private sectors and civil societies, to support and consolidate the important structural reforms initiated in the country."