World Bank forecasts 5% growth for Argentina in 2025

Argentina’s economy likely contracted by 2.8 percent last year but will grow substantially this year, the World Bank predicted Thursday in a report looking ahead to 2025. 

“Argentina began to recover in the second half of the year, supported by gains in agriculture and mining. Inflation remained somewhat persistent toward the second half of the year, with food prices rebounding and core inflation increasing slightly,” said the World Bank report.

After two years of recession, President Javier Milei’s government will oversee a significant growth of approximately five percent in gross domestic product this year, followed by a further 4.7 percent in 2026, the global institution predicted.

While global growth will remain flat this year, Latin America will see an improvement of 2.5 percent in 2025, up 0.3 points on the 2.2 percent seen last year, “as Argentina recovers, interest rates normalise and inflation falls,” said the World Bank.

In Latin America, commodity prices will prop up the region's exports, “although subdued growth in China could limit demand” for goods, it warned.

Breaking down its estimates by region, it forecasts that Brazil will grow 2.2 percent (down from 3.2 percent in 2024 due to tight monetary policies and weak fiscal support), Mexico 1.5 percent, Colombia three percent, Chile 2.2 percent, Peru 2.5 percent and Bolivia 1.5 percent.

Completing South America’s line-up are Ecuador at two percent, Paraguay at 3.6 percent and Uruguay at 2.6 percent.

In the Caribbean, growth in 2025 is projected to reach 4.9 percent, predominantly led by the expansion of Guyana's oil sector.

The estimates, the World Bank’s experts warned, are subject to a number of risks, including fiscal instability, core inflation (which excludes volatile food and energy prices) and tightening monetary policies. 

Global outlook

Zooming out, the World Bank forecast that global growth should remain stable this year and next, but at recent historic lows, expressing particular concern about growth in developing countries.

Growth should hit 2.7 percent in 2025 and 2026, in line with the level reached last year, while  inflation and interest rates should "decline gradually" over this period. 

"Growth in developing economies is also expected to hold steady at about four percent over the next two years," the institution said, noting that this was a weaker performance than before the Covid-19 pandemic. 

Growth at this level would be "insufficient to foster the progress necessary to alleviate poverty and achieve wider development goals," it added. 

As a sign of this slowdown, economic growth per capita in developing countries since 2014 – excluding China and India – has been 0.5 percentage points lower, on average, than in wealthy economies, the bank's report found. 

In response to this weaker growth, the world's developing countries need to develop a new playbook to push through domestic reforms, Gill said. This playbook should encourage greater private sector investment, deepen trade relations, and promote a "more efficient use of capital, talent and energy," he said.

The World Bank expects growth to slow in East Asia and the Pacific, as well as in Europe and Central Asia, due to a combination of weak domestic demand in both China and Europe.

On the other hand, sub-Saharan Africa, Latin America, the Middle East and North Africa will benefit from stronger demand, leading to more robust growth. 

According to the World Bank report, overall economic growth in the 21st century fell from 5.9 percent in the 2000s to 5.1 percent in the 2010s and 3.5 percent in the 2020s. 

– TIMES/AFP/NA