The World Bank slightly improves the growth forecast for Latin America in 2023

The financial institution raises the projection of the progress of the regional economy from 1.3 to 1.5%, although this figure still represents a sharp slowdown in relation to 2022.

The World Bank (WB) once again improved the growth forecast for Latin America and the Caribbean in 2023, from 1.3 to 1.5%, although that figure continues to represent a sharp slowdown in relation to the previous year, when according to still provisional data the region advanced by 3.7%.

The international financial institution recalls in its latest ‘World Economic Outlook’ report that in 2022 “the growth of the main Latin American economies slowed down due to the lower external demand and restrictions on monetary policies“.

In addition, in the fourth quarter of that year, Argentina and Brazil contracted and other countries recorded “milder growth.”

“This slowdown translates into projected growth for 2023,” the document states. In 2021, the region grew by 6.9%, due to the rebound effect of 2020, when the coronavirus pandemic caused a 6.2% drop.

The WB warns that “the low growth in advanced economies will affect the demand for exports”, something vital for a region that sells a lot of raw materials.

“Continuing tight monetary policies in these economies and persistently high domestic inflation are likely to prevent any substantial improvement in financial conditions in the near term,” the text added.

The main economies

According to the predictions of the WB, among the main economies in the region, Mexico stands out, which will grow by 2.5% this year, but will slow down to 1.9% in 2024. Brazil will expand modestly in the next 2 years, 1 .2% in 2023 and 1.4% in 2024.

Argentina and Chile will contract this year, 2% and 0.4% respectively. In 2024, the projection is that they will grow 2.3% and 1.8%. Colombia will advance this year by 1.7%, while Peru will do so by 2.2%.

Central America and the Caribbean

In the case of Central America and the Caribbean, the outlook is more positive, encouraged by the boom in remittances and tourism.

The first region will reach 3.5%, with increases ranging from 2.3% in El Salvador to 5.7% in Panama.

In the Caribbean subregion, the case of Guyana stands out, which will grow by 25.2%, following the trend of very high growth figures in recent years “due to the oil boom.” The rest of the countries will grow an average of 3.3%.

risks

The report also points out that in the next decade regional growth will be lower than that of other emerging countries, because productivity and the labor market will improve below average.

And it warns of various risks that could worsen the situation, such as the possibility that China’s real estate sector weakens furtherwhich would affect the prices of metals (mainly copper and iron) and would represent a risk of deterioration for Brazil, Chile and Peru.

There is also a lot of uncertainty about climate change. “Droughts in Argentina or excessive rainfall in Colombia could once again increase the chances of experiencing extreme ‘La Nina’ or ‘El Nino’ events,” the report said.