He world Bank estimates that Latin America it 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.
said the bank’s chief economist, Indermit Gill, 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 the rate increases is starting to take effect.”
He pointed out, in a context in which inflation continues to be high, “especially that of food”, something that “will probably lead to a fall in 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 internal 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” in Latin America and the Caribbean, which “has weakened consumer and investor confidence.”
At the beginning of this year there were important protests in Peru after the removal of the previous president, while in Chile a new constitutional reform is currently being debated after the rejection of a previous 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.
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