The United Nations Organization (UN) In its latest economic report, it predicts lower growth in the economies of Latin America and the Caribbean this year, with an increase of 1.6% in regional GDP, compared to the estimated increase of 2.2% in 2023.
In the presentation of the report, which was presented this Tuesday, January 16 in a UN Mexico videoconference, economist Sebastián Vergara highlighted that the region’s economy has experienced low growth “for many years” and that it is a problem ” structural”.
The economic growth of the region exceeded expectations in 2023 thanks to the resilience of consumption and investmentstrong capital inflows and the strength of external demand, but it will be weighed down this year by various factors.
The regional report “World Economic Situation and Outlook (WESP) 2024” attributes this slowdown to restrictive monetary policies.
Slower external demand will limit export growth, and both structural vulnerabilities and political uncertainties will weigh negatively on export investment.
On the other hand, the forecast that the economies of the United States and China will also slow down (with a growth of 1.4% in the former and 4.7% in the case of the Asian giant) could affect exports, remittances and capital inflows to Latin America and the Caribbean.
The region also faces volatility in global financial markets that could affect capital inflows and is driven by factors such as interest rate decisions by the US Federal Reserve or an escalation of geopolitical conflicts.
Impact of El Niño, inflation and the lack of macroeconomic policies
Furthermore, the effects of climate change and meteorological phenomena such as The boy could trigger new inflationary pressures, and the UN points out that the limited existence of macroeconomic policies in the region and weak investments hamper their ability to address the challenges arising from this crisis.
Regarding inflation, the report estimates that it will go from 6.8% to 4.3% in 2024, excluding Argentina and Venezuela, where it will be much higher.
Besides, It also foresees lower employment growth in the region and an increase in the unemployment rate in some economies.
By country, the UN highlights the drop in GDP growth in Brazil (from 3.1% in 2023 to 1.6% this year) due to the impact of higher interest rates, and in Mexico (from 3.5% the previous year to 2.3% in 2024), amid the economic slowdown in the US.
Source: Larepublica
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