BUENOS AIRES, July 4 (Reuters) - Argentine inflation should end 2019 under 40.3% while the economy shrinks 0.8%, according to a preliminary draft of the government’s upcoming budget proposal published on Thursday.
Consumer prices are expected to rise a much more moderate 26.1% next year, according to the bill, to be presented to Congress in September. The document forecasts a 3.5 percent expansion in gross domestic product in 2020.
Latin America’s No. 3 economy has been hammered by recession and inflation of more than 57 percent over the last 12 months as President Mauricio Macri prepares for a tough run for re-election in the October general election.
Argentina’s fiscal targets, on track so far this year, are about to get squeezed as pension payouts rise and tax revenues weaken. Macri has been tightening spending to trim the debts that forced Argentina into a $57 billion financing deal with the International Monetary Fund last year.
The budget draft forecasts a primary fiscal surplus of 1% of gross domestic product next year after reaching fiscal equilibrium in 2019. Analysts are generally more pessimistic in their forecasts for Argentina. A recent Reuters poll of economists showed expectations of a 0.7% fiscal deficit in 2019.
Reporting by Jorge Iorio writing by Nicolas Misculin and Hugh Bronstein Editing by Leslie Adler