Argentine recession over by Q2?

buenos aires — Argentina’s shrinking economy will bottom out in the first three months of next year and start to recover in the second quarter, an International Monetary Fund (IMF) official said.

The fund last month upped the size of its standby financing deal with Argentina to $56.3 billion after negotiating tougher fiscal measures that have already dented the popularity of President Mauricio Macri ahead of his 2019 re-election bid.

“The bottom of the recession, the floor, will be hit the first quarter of 2019, and in the second quarter we are going to see a recuperation,” IMF mission chief for Argentina Roberto Cardarelli told reporters at a press briefing in Buenos Aires.

The revamped IMF agreement calls on the Macri government to deepen spending cuts and raise taxes to bring the primary fiscal deficit, projected at 2.7 per cent of gross domestic product in 2018, to zero next year.

Cutting the deficit during a presidential election year is almost unheard of in Argentina, where wide swaths of the population have come to rely on welfare programmes and subsidies that helped the country recover from a 2002 economic crisis that tossed millions of middleclass Argentines into poverty.

Government spending reductions are being made all the more painful by a recession that began earlier this year after a drought wrecked the country’s main cash crop, soyabeans.

The fund expects Latin America’s third-biggest economy to contract by 2.8 per cent this year and by 1.7 per cent in 2019. —