2023-04-20 20:45:46
Latin America and the caribbean they continue to be weighed down by well-founded clichés about their economy. The Economic Commission for Latin America and the Caribbean (ECLAC) reported this Thursday that that part of the world, despite being far from sources of international conflict such as Ukraine, Russia and China, will continue this year with low economic growth and little participation in the International Trade. According to him ECLAC report“the rises experienced by interest rates worldwide were added to the financial turmoil observed at the beginning of March, which has accentuated the uncertainty and volatility of financial markets“. Live the countries in the area between growing external uncertainties and internal constraintsso it is expected that economic growth in the area remains at a modest 1.2%.
Despite this globally negative message, the truth is that only Argentina, Chile and Haiti are the only Latin American countries whose economies will fall in 2023. ECLAC expects Argentina’s gross domestic product (GDP) to contract by 2%, compared to the 1% growth it estimated last December. The International Monetary Fund (IMF) has already announced difficulties for Argentina this year, cutting growth from 2% to 0.2% for this year.
Brazil It ranks as the country in the area that will grow the least in 2023, staying at 0.8% (one tenth less than what was forecast in December). However, among the lobis of internationalized companies, Brazil is considered a country to take into account as an investment target market, as a consequence of a protectionism that means that to sell in Brazil it is necessary to have an industrial establishment if you want to avoid the high tariffs.
According to ECLAC, Colombia It will experience a scenario of slowdown in its economy, with a GDP increase of only 1.2%. The protests of Peru or Bolivia’s economic instability will have an impact on its growth, with its outlook worsening to 2% in both cases. Uruguay or Ecuador remain in the same figure. On the contrary, Paraguay will have the best performance within South America, with an improvement of two tenths of its growth, up to 4.2%.
Finally, the activity in Mexico it will be better than expected, with an expansion of 1.5%. Mexico is one of the countries preferred by Spanish companies to invest and with good prospects for this year. It is accompanied by other Central American countries such as El Salvador, Costa Rica or Panama, which will also grow more than expected (up to 2%, 2.7% and 4.6%, respectively).
As in the rest of the world, the inflation in the region shows a certain moderation trend this year, although the effects of the restrictive policy on private consumption and investment are noticeable. In the fiscal area, the ECLAC report acknowledges that the authorities have little room for maneuver while public debt levels remain high. “In a context of high demands for public spending, measures will be required to strengthen fiscal sustainability and expand fiscal space by strengthening the collection and redistributive capacity of tax policy,” the agency warns.
The United Nations regional commission it is estimated that all the subregions would show lower growth in 2023 compared to 2022. South America will grow by 0.6% in 2023 (3.8% in 2022), the group made up of Central America and Mexico will do so by 2.0% (compared to 3.5% in 2022) and the Caribbean (excluding Guyana) will grow by 3.5% (compared to 5.8% in 2022).
South America will be affected by the drop in the prices of basic products and by the restrictions on the space that domestic policy has to prop up activity. High inflation has impacted real income and is having effects on private consumption and investment in the countries.
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In the Caribbean economies, the slowdown expected in 2023 is mainly due to the fact that inflation has impacted both real income, and with it consumption, as well as production costs, with a negative effect on the competitiveness of exports of both goods and of tourism.
Finally, for the economies of Central America and Mexico, although this year’s growth represents a slowdown compared to 2022, in some cases there have been upward revisions compared to what ECLAC forecast at the end of last year. The growth of the United States, the main trading partner and main source of remittances for the countries in the area, should improve both the external sector and private consumption throughout the area, according to ECLAC. The cut in the price of energy should have a positive influence.
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