World Bank economist rules out risk of hyperinflation in Argentina

The World Bank has ruled out the risk of hyperinflation in Argentina, where year-on-year prices have surged more than 50 percent, and believes a new agreement with the International Monetary Fund (IMF) regarding the country's multi-billion-dollar debt will further reduce that possibility.

"I don't see that risk," said William Maloney, the World Bank's chief economist for Latin America and the Caribbean, at a press conference on Wednesday, when asked about the threat of consumer prices spiralling out of control in consumer prices in Argentina.

"Inflation is around 50 percent but the government still has some tools to prevent the crisis from deepening. In addition, reaching an agreement with the IMF will anchor expectations, further reducing risk," Maloney added.

So far in 2021, consumer prices have increased increased 32.3 percent, according to data from the INDEC national statistics bureau. The agencyreported a year-on-year increase in the cost of living of 51.4 percent last month (September) – one of the highest annual rates in the world.

President Alberto Fernández's government is currently in talks with the IMF over a new extended fund facilities (EFF) plan that would spread Argentina's repayments owed under the terms of its original 2018 deal signed by the government of Mauricio Macri. The country owes the Fund some US$44-billion from the record credit-line, which was set to be worth a total US$57 billion.

In its latest semi-annual report for Latin America and the Caribbean, presented on Wednesday, the World Bank estimated that Argentina's economy contracted by 9.9 percent in 2020, with a projected expansion of 7.5 percent in 2021, and growth of 2.6 percent in 2022 and 2.1 percent in 2023.