MIAMI.- The economies of Latin America and the Caribbean continued to slow in 2023 and the outlook for next year is not encouraging: the growth rate is expected to be even lower, as is job creation, the Economic Commission for Latin America and the Caribbean said on Thursday (ECLAC).
This year will close with a modest growth of 2.2% of the regional Gross Domestic Product (GDP) and by 2024 it is projected to be 1.9%, according to the Preliminary Balance of the Economies of Latin America and the Caribbean for 2023.
ECLAC revealed the perspectives included in its report during a press conference held at its headquarters in Santiago, Chile, and broadcast virtually on its social networks at a time when the region faces an unfavorable international economic context in which numerous countries have implemented restrictive monetary policies.
Although the current international context is impactful, ECLAC warned that the slowdown in Latin America has been going on for years.
While between 1951 and 1979 the regional GDP grew at an average of more than 5% annually, between 1980 and 2009 it grew at less than 3% annually and between 2010 and 2024 at an average of 1.6% annually, ECLAC said.
GDP per person, for example, will only recover its 2013 level in 2023.
To contain inflation, the most developed countries in the world, including the United States, which is Latin America’s main trading partner, drastically raised interest rates, restricting access to financing and cooling the world’s main economies when they were just taking off after the paralysis caused by the coronavirus pandemic.
The unfavorable external scenario also includes stagnation in world trade in goods.
The global economy is expected to grow 3% in 2023 and 2.9% in 2024, below the historical average of 3.8% recorded between 2000 and 2019. The United States Federal Reserve estimates that its country’s economy will expand a modest 1.4% in 2024 and 1.8% in 2025. China, which is the region’s second trading partner, projects growth of 5% this year and 4.2% in 2024, slightly below what was anticipated in the middle of the year although above the 3% in 2022.
Although inflation has decreased in much of developed countries, their interest rates have not yet been reduced. Consequently, difficulties in accessing financing are expected to continue next year.
At the end of 2023, all Latin American subregions will show lower growth compared to 2022: South America will grow by 1.5% (3.8% in 2022), Central America and Mexico by 3.5% (4.1% in 2022) and the Caribbean (not including Guyana) 3.4% (6.4% in 2022), according to ECLAC.
By 2024 the slowdown will continue: South America would grow by 1.4%, Central America and Mexico by 2.7% and the Caribbean by 2.6%.
Argentina and Haiti are the only countries in the region that will have negative growth this year: -2.5% and -1.8%, respectively. By 2024 both will improve, although the South American nation will still have negative growth of -1%, according to ECLAC forecasts. Haiti will grow 1% next year.
Chile was on the brink of recession, with modest growth of 0.1% in 2023 and 1.9% expected for next year.
In Latin America, Panama grew the most in 2023, 6.1%, followed by Costa Rica, with 4.9%. Brazil grew by 3% and is expected to fall to 1.6% in 2024; Colombia 0.9% which would rise to 1.7% in 2024 and Mexico 3.6% and 2.5% expected for next year.
Regarding employment, the regional economic body expects that by the end of 2023 it will have grown by 1.4%, equivalent to a reduction of four percentage points compared to the 5.4% in 2022. This better job creation will continue in 2024, with an estimated growth of just 1%.
Inflation, meanwhile, fell from a peak of 8.2% in November 2022 to a regional average of 3.8% in 2003. For next year it is expected to be 3.2%, although there are countries such as Brazil, Chile, Paraguay and Peru that have managed to bring it to a range that is within their goals and others such as Mexico, Colombia and Jamaica that could even see an increase in the coming months, ECLAC said.
Source: With information from AP
