He world Bank estimates that Latin America will grow only 1.5% in 2023, an advance well below the 3.7% registered last year, due to the drop in the price of raw materials and the effects of interest rate rises.
In its new global outlook report, however, the Bank increased the outlook by two tenths of a point compared to its previous projections made in January. For 2024, it reduced its prospects by 4 tenths, and now considers that the region will grow 2%.
“In the case of Latin America, both the external and internal drivers of growth in the region point to a slowdown this year”, the bank’s chief economist, Indermit Gill, said in a conversation with the media.
Due to external causes, he refers to the prolonged effects of the pandemic, the war in Ukraine and the strong tightening of monetary policy on the main economic policies, which are causing a global slowdown, especially strong in advanced economies, which will have consequences for America Latina.
Thus, by 2023, world activity is expected to slow down, with global growth of 2.1%, four tenths more than its previous estimates. In 2024 growth will be 2.4%, three tenths more.
As Gill explained, weak global growth weighs on commodity prices and has an impact on exporting countries. Added to this is the fact that monetary policy has remained strict in the region during the last 12 months due to high inflation.
“The impact of rate increases is starting to take effect”, he pointed out, in a context in which inflation continues to be high, “especially the food“, something that “will probably lead to falling real wages and that will reduce consumption”.
World Bank projections indicate that Latin America and the Caribbean will grow just 1.5% this year, two tenths more than previously estimated.
The Bank estimated that the relaxation of domestic monetary policies will begin towards the end of this year, which will allow growth to increase to 2% in 2024 (four tenths less than estimated).
Among the main economies in the region, Mexico stands out, which will grow by 2.5% this year (although it will slow down to 1.9% in 2024) and Brazil, which will maintain very modest figures for both years (1.2% in 2023 and 1.4% in 2024). ).
They will suffer a contraction, however, Argentina (of 2%), weighed down by the severe drought that has affected its agricultural production, and Chile, which will contract by 0.8%. Both economies will recover in 2024 and register growth of 2.3% and 1.8%, respectively.
In its report, the World Bank also recalls that “Social unrest and political uncertainty have persisted in several countries” of Latin America and the Caribbean, which “It has weakened consumer and investor confidence.”
“Major protests took place in Peru earlier this year following the removal of the previous president, while a new constitutional reform is currently being debated in Chile following the rejection of an earlier proposal in a referendum.”, the report states.
Argentina, it adds, faces high inflation rates and possible policy adjustments amid the drought, while Brazil debates changes to its fiscal rules, including possible adjustments to spending limits.
Source: EFE
Source: Gestion
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