Economically, the past year has been better than expected for Latin America, where gross domestic product (GDP) growth of 3.9% is expected, according to the International Monetary Fund (IMF). In its latest update of the economic outlook, the multilateral organization assures that inflation and Russia’s war in Ukraine will continue to dampen growth. The region will grow 1.8% this year, 0.1% more than expected this year. In 2024, the expected GDP growth is 2.1%.
The slight upward revision of the forecast for this year is due to increased expectations for the two largest economies, Brazil and Mexico. “The forecast revision reflects improvements of 0.2 percentage points for Brazil and 0.5 percentage points for Mexico, reflecting better-than-expected resilience in domestic demand, stronger-than-expected growth in the economies of major trading partners and, in the case of Brazil, higher-than-expected fiscal support.” , according to the report published on Monday afternoon.
For 2024, the estimate for Latin America fell by 0.3%, reflecting tighter financing conditions, lower prices for exported commodities and lower growth from trading partners. Around half of the emerging and developing countries analyzed by the IMF will show lower growth in 2023 than in 2022.
“The global fight against inflation, Russia’s war in Ukraine and the outbreak of COVID-19 in China slowed global economic activity in 2022, and the first two factors will continue to do so in 2023,” the 13th report said -side report published by the Fund. “Growth in the United States remains stronger than expected, and consumers continue to spend their savings (the personal savings rate is at its lowest in more than 60 years, except for July 2005), unemployment is nearing a record low and job opportunities are strong abundant . But in other regions, high-frequency activity indicators (such as business and consumer attitudes, purchasing manager surveys, and mobility indicators) generally point to a slowdown.
Fuel and commodity prices have fallen and so has general inflation, particularly in the United States, the euro area and Latin America. But underlying inflation, that is, inflation related to products whose prices do not typically fluctuate widely, has not yet peaked in most economies and remains well above pre-pandemic levels. In addition, the fund notes that “risks to financial stability remain heightened as investors reassess the outlook for inflation and monetary policy.”
The fund recommends measures to stimulate economies, such as Such as achieving global “disinflation”, containing the resurgence of Covid-19, ensuring financial stability, restoring debt sustainability, supporting the most vulnerable and strengthening multilateral cooperation.
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