Our new projections reflect a slow first semester and a difficult fiscal situation
The NFPS results for the first two quarters of 2019 showed what the new administration will have to deal with in the second half of the year: large deficits as a result of lower revenues and higher expenditures. The net position of the NFPS (-US 2,317 million) doubles the amount of the same period of 2018. According to MEF, this deficit represents already 3.3% of the full year’s nominal GDP, higher than the 2% allowed by the Fiscal social responsibility Law (FSRL) for 2019. If our projection of around 4 percent of nominal (and real) GDP applies, the deficit by Q II would be 3.4% of GDP. If the austerity plan is successful, the net deficit will be 3.5% of GDP; if it is not, it may reach as much as 4.5% of GDP, according to our estimations.
Our GDP growth projections for 2019 and 2020 are 3.8% and 4.0%, respectively. These figures are lower than our previous estimates in March due to the weak indicators of the first semester and the likely effects of the fiscal austerity program that is under revision.
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