ECLAC reduces Peru’s GDP forecast to 2% for 2023, but remains above the average for the region

According to the Economic Commission for Latin America and the Caribbean (Cepal)the economy Peruvian will maintain an advance of only 2% this year when, previously, the agency had predicted that the national GDP would rise by 2.2%.

Also, with respect to Latin America and the Caribbeana deceleration and slowdown of the Gross Domestic Product (GDP), which would grow only 1.2% this year. In December the projection was 1.3%.

In detail, the entire region will have a lower development this year compared to 2022. In South America, it will only increase by 0.6% from the 3.8% that was raised the previous year.

In Central America and Mexico the figure barely reaches 2.0% compared to 3.5% in 2022 and the Caribbean will grow 3.5% compared to the 5.8% it reached before.

Why will the Latin American economy contract?

According to the United Nations body, the drop in economic expectations is due to external uncertainties and internal constraints. At the international level, the scenario is one of slow growth in economic activity and world trade.

In addition, a rise in interest rates worldwide and volatility in financial markets after the bankruptcy of the US bank Silicon Valley Bank and the contagion to other banking entities. This could cause a more persistent tightening of global financial conditions, with the consequent impacts on the access and cost of financing.

“Although inflationary pressures have slowed, monetary policy rates can be expected to remain high throughout 2023 in the main developed economies,” the report said.

For its part, Latin America faces 2023 with limited space for fiscal and monetary policy. Along these lines, the effects of the restrictive policy on private consumption and investment could be felt more strongly this year.