ECLAC raises growth estimate in Latin America; Peru lags behind in the region

The Economic Commission for Latin America and the Caribbean (ECLAC) this Thursday raised its regional GDP growth projection for 2023 by 0.6% from 1.7%, estimated last September, to 2.2%, but warned about the risks of “maintain a low growth path”.

By 2024, growth will fall to 1.9%, which implies a slowdown in regional growth compared to the levels observed in 2022, indicated the United Nations organization based in Santiago, Chile, in the ‘Preliminary Balance of the Economies of America. Latina and the Caribbean 2023´, its last report of the year.

“It is necessary to scale productive development policies with a focus on dynamic strategic sectors, promote policies to promote public and private investment, and adapt the financing framework to enhance the mobilization of resources“said the executive secretary of ECLAC, José Manuel Salazar-Xirinachs.

Although all subregions will show lower growth in 2023 compared to 2022, the report highlights the heterogeneity that exists between the countries in the region.

The low growth trend, according to the document, “will mean a slowdown in job creation and the persistence of informality and gender gaps, among other effects”.

Panama, Costa Rica and Paraguay, those that grow the most

Panama (6.1%), Costa Rica (4.9%), Paraguay (4.5%), Mexico (3.6%), Guatemala (3.4%) and the Caribbean islands – not counting Guyana – (3.4%) will lead economic growth this year, Nicaragua (3.3%), Honduras (3.3%) and Dominican Republic (3.1%).

In the middle of the table are Venezuela (3%), Brazil (3%), El Salvador (2.3%), Bolivia (2.2%), Ecuador (1.9%) and Cuba (1.5%).

At the bottom, but still with positive figures, are Uruguay (1%), Colombia (0.9%), Peru (0.3%) and Chile (0.1%). Haiti (-1.8%) and Argentina (-2.5%) are the only ones that will decrease this year, according to the United Nations agency.

Latin America, the most unequal region in the world and the most affected by the pandemic, grew by 6.9% in 2021, as a rebound after the 6.8% collapse recorded in 2020, the largest 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%.

Inflation falling

In 2023, ECLAC expects the region’s median inflation to drop to 3.8%, much lower than the 8.2% recorded in 2022, while in 2024 it would be 3.2%.

“Although inflation has decreased, interest rates in the main developed economies have not been reduced, so financing costs have remained at high levels all year and are expected to remain so for the next few years.“, indicated the organization.

Regarding employment, the organization predicts that the number of employed people will have grown by 1.4%, which represents a reduction of four percentage points compared to the 5.4% registered in 2022.

“This lower job creation will extend into 2024, when the number of employed people is projected to grow by 1%”he added.