ECLAC once again lowers its estimate of economic growth for Latin America and the Caribbean

The economy of Latin America and the Caribbean would expand by 1.2% this year, in the midst of a complex external scenario, marked by low growth in the economic activity and world trade, said Thursday the ECLAC.

The projection of the Economic Commission for Latin America and the Caribbean is slightly less than the advance of the 1.3% that he had predicted in December. Last October, he anticipated an expansion of 1.4% for the region this year.

“The economies of Latin America and the Caribbean face a complex external scenario in 2023, marked by low growth in economic activity and world trade”, the United Nations body said in a statement.

“Additionally, to the rises experienced by interest rates worldwide, the financial turbulence observed at the beginning of March was added, which has accentuated the uncertainty and volatility of financial markets.”, he added.

The ECLAC forecast an increase in the Gross Domestic Product (GDP) of 0.8% for Brazil in 2023, compared to the increase of 0.9% estimated in December, while that of Mexico it would expand 1.5%, from the previous 1.1% advance.

Activity would grow by 1.2% in Colombia and 2% in Peru.

The GDP of Argentina it would fall 2% this year, compared to the estimate of a 1% rise that the agency had forecast in December.

Meanwhile, the Chilean GDP would fall by 0.3%, better than the previously estimated fall of 1.1%.

The agency pointed out that inflation in the region shows a downward trend but the effects of a restrictive monetary policy on private consumption and investment will be felt more strongly this year.

The region’s central banks have raised their benchmark interest rates to combat inflationary pressures.

The regional projection is subject to downside risks “given the possibility that the turbulence in the global banking system -or in the financial system as a whole- will re-emerge and intensify, which would result in a more persistent tightening of world financial conditions, with the consequent impact on access and cost of financing“, he claimed.

According to the institution, the region once again has a “limited” space for fiscal policy this year and “it is not to be expected that a cycle of monetary easing in the region will still be generalized.”

”Inflation in the region shows a downward trend and, although it is expected that the process of raising interest rates in various countries of the region may be nearing its conclusion, the effects of the restrictive policy on private consumption and investment will be felt more strongly this year,” he added in a statement.

Argentina, Haiti and Chile: the only ones that decreased

Venezuela (5%), Panama (4.6%) and the Dominican Republic (4.6%) will lead economic growth this year, followed by Paraguay (4.2%), the Caribbean islands (3.5%), Guatemala (3.2%), Honduras ( 3%), Costa Rica (2.7%) and Nicaragua (2.3%), according to the statement.

In the middle of the table are El Salvador, Uruguay, Peru, Ecuador and Bolivia, all with an estimated growth of 2%, followed by Cuba and Mexico, both with an increase of 1.5%.

At the bottom, but still with positive figures, are Colombia (1.2%) and Brazil (0.8%), while Chile (-0.3%), Haiti (-0.7%) and Argentina (-2%) are the only ones that will decrease this year, according to the United Nations body.

Latin America, the most unequal region in the world and the one most affected by the pandemic, grew 6.9% in 2021, as a rebound after the 6.8% collapse registered in 2020, the biggest recession in 120 years.

The slowdown in the region began in the second half of 2022, which closed with an estimated growth of 3.7%, according to ECLAC, which has not yet provided the final figure.

With information from Reuters and EFE