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IMF raises its expansion forecast for Latin America in 2022 and lowers that of 2023

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The International Monetary Fund (IMF) revised upwards its forecast for the growth of the economies of Latin Americacontrary to their forecasts for global performance, due to a stronger than expected strength of the large engines in the region, Brazil Y Mexico.

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In a partial update to its World Economic Outlook report, the Washington-based IMF said it now expects Latin American economies as a whole to grow 3%, an increase of 0.5 percentage point from its April estimate.

However, the outlook becomes more complicated next year, due to what is expected to be a sharp slowdown in the United States and China, and the effects of tougher local monetary conditions to combat inflation.

For 2023, the IMF cut the growth outlook for the region’s Gross Domestic Product (GDP) by 0.5 percentage points to 2%.

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“While the revisions are mostly negative for advanced economies, diverging exposures to unfolding events imply a more disparate outlook for emerging markets and developing economies,” the IMF said.

In the case of Brazil, the agency raised its projection by 0.9 percentage points and now estimates a GDP expansion of 1.7% for this year, although in 2023 the growth of the largest Latin American economy will slow to 1.1%.

The estimate for Mexico was also increased, encouraged by strong activity in the first months of the year. The report projected economic growth of 2.4% in 2022, an increase of 0.4 percentage points from April, but an advance of 1.2% in 2023, down substantially 1.3 percentage points from the last report.

Local analysts expect the Mexican economy to show progress for the third consecutive quarter when figures on GDP performance between April and June are released later this week, although the momentum is running out of steam due to external pressures, such as the war in Ukraine and lockdowns in China.

The upward revision for the region also reflects stronger macroeconomic data from Chile and Colombia, the IMF said.

Source: Gestion

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