Economic conditions across Latin American economies vary widely: While growth remained solid in the first half of 2023 in countries such as Brazil, Mexico and Costa Rica, it slowed in Colombia and Chile and was weak in Peru and Argentina, the agency reported on Wednesday . Organization for Economic Cooperation and Development (OECD). “However, some convergence is expected in 2024-25 and most of these economies are expected to see GDP growth in the order of 2-3% in 2025,” the Paris-based analytical center predicted.
“Official interest rates in Brazil are expected to fall further and tighter credit conditions are expected to steadily reduce inflation,” the global economic outlook report said. “Mexico is expected to begin cutting interest rates later, in the second half of 2024, when both headline and core inflation are expected to fall below 4%, the upper bound of the inflation target range. Inflation,” the text says.
For emerging economies, such as the Latin American region, the OECD points to a number of risks associated with the 2025 forecasts. The unusually rapid and comprehensive tightening of monetary policy in most major economies over the past two years has created significant uncertainty and could continue to expose vulnerabilities among households, companies, financial market participants and governments.
“Increasing geopolitical tensions could also slow growth and increase inflation,” the OECD said in its 221-page year-end report. “Given China’s overall importance to the global economy, ongoing structural tensions in China pose further downside risk to global growth forecasts.” Additionally, current climate change increases the risk of extreme weather events, some of which have the potential to trigger negative supply shocks with global implications .”
In addition, the El Niño event that began earlier this year increases the risk of extreme weather events as well as possible short-term negative impacts on agricultural production in Australia and New Zealand, Southeast Asia, South Africa and many Latin American economies. “Overall, risks to the forecasts remain to the downside, although more favorable outcomes are also possible,” the OECD concluded.
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