The rating agency US Fitch Ratings predicted a 2.5% decline for Argentina's economy in 2018, with inflation reaching more than 40% per annum in December.
The company was founded by John Knowles Fitch believes that the New negotiations between the Argentine government and the International Monetary Fund (IMF) reflect proactive attempts to mitigate short-term financing risks and reduce financing needs.
The agency said, however: there is a looming economic recession and political challenges for budget saving which entail risks for the country's budgetary outlook and the financing program.
"These factors will be crucial to the sovereign credit rating by Fitch," The office kept an analysis of the economic, political and financial situation of Argentina.
The macroeconomic outlook of Argentina has deteriorated since May, when Fitch revised its Outlook to "stable" from "positive", and its "B" rating.
The adjusted financial conditions, which have the highest interest rates in history (60%), loss of confidence, real wages in erosion and faster fiscal consolidation will have a strong effect on growth.
Fitch predicted that the real gross domestic product (GDP) will be 2.5% in 2018 and will remain stable in 2019; In addition, he estimated that inflation will exceed 40% in 2018, far exceeding the 27% target of the SBA.
"Investors' confidence in Argentine debt has worsened since June, when the IMF loan was launched, indicating that the loan has not stabilized the markets or encouraged private funds, whatever their purpose."said the agency.
Despite these negative trends, new tax measures and efforts to mobilize greater public sector funding are positive developments that can help to reduce the "double deficits" faster than expected and the dependence on market funding.
Fitch believes that the risk of sovereign debt is mainly related to liquidity and that the risks associated with debt sustainability may rise if the negative effects of the contraction of real GDP, the depreciation of the peso and high interest rates are aggravated for fiscal consolidation lower than expected.
"This could complicate the recovery of market access," printed the desk.