The World Bank released its forecast for the growth of the Gross Domestic Product (GDP) of Latin America and the Caribbean, as well as the countries that make up this region.
Favorably, it indicated an upward revision of five tenths to 2% for 2023. At the same time, it placed its projections for 2024 at 2.3% and for 2025 at 2.6%, something very close to 2. .4% that was estimated for both years.
The estimated expansion for 2023 is still below all other regions of the world. According to the entity, this growth remains insufficient to reduce poverty and create jobs, while fiscal restrictions limit the possibility of making the necessary investments. Among the reasons that led the organization to improve its forecasts are the “appropriate” macroeconomic reforms that the region has applied in the last three decades.
He also explained that these measures gave countries greater resilience in the face of shocks such as inflationary pressures, uncertainty arising from the war in Ukraine, low commodity prices and growing debt in the post-pandemic stage.
Likewise, the EuropaPress agency reported, poverty and employment have generally returned to their pre-crisis levels, and inflation (excluding Argentina and Venezuela) fell to a regional average of 4.4%, below the countries of the Organization for Economic Cooperation and Development (OECD). However, although the Latin American scenario improved, the global context remains adverse, marked by high interest rates, low growth in advanced economies and uncertain prospects for China.
Likewise, he warned that regional governments will continue to face fiscal restrictions. While the debt-to-GDP ratio is estimated at 64%, up from 67% a year ago, it is still above the 57% recorded in 2019 and high rates have raised the burden of debt service.
Perspective by countries
By country, the World Bank revised the projections for the economies of Colombia, Bolivia, Peru and Ecuador downwards. Mainly, in the last two countries it is estimated that they will stop growing by 2.2% and 2.6%, respectively, as calculated in June, to 0.8% and 1.3%, respectively.
In the case of Colombia, the revision is two tenths, to 1.5% (before it was 1.7%). Although it is higher than that predicted by the Bank of the Republic (0.9%). In Bolivia it is six tenths, up to 1.9%. Paraguay will be one of the South American countries that grows the most in 2023. Reaching 4.8%, as estimated by the Economic Commission for Latin America and the Caribbean (ECLAC). Meanwhile, Uruguay will recover despite the drought and the economic influence of Argentina and its economy will climb to 3.3% this year. In Central America, the scenario is varied.
Meanwhile, the World Bank once again estimated that Chile, Haiti and Argentina will be the three economies in the region that will experience a contraction this year. However, while the 0.4% drop for Chile continues, the organization foresees a greater recession in the island country (2.5% compared to the 2.4% expected in June) and in Argentina, where the revision is of 0.5 percentage points (up to forecasting a drop of 2.5%).
For its part, Brazil is one of the countries whose growth has been revised upwards by a greater percentage. Specifically, it rose by 1.4 percentage points, to 2.6%, in line with the movement of other international organizations. The same thing happens with Mexico, which will finally reach 3.2% growth (in June it was estimated at 2.5%).
Thus, Panama will grow even more than expected in June, up to 6.3%, as will Guatemala (from 3.2% to 3.4%), Nicaragua (from 3% to 3.1%) and El Salvador (from 2.5% to 2.8%). Honduras, however, has lost three tenths in its forecast, remaining at 3.2%. The border conflict with Haiti could harm the Dominican Republic’s economy, which will grow 3.1% in 2023, one point less than expected three months ago, although nearshoring could have a positive impact.
Digital connectivity, greater growth
To boost growth, the World Bank presented the report “Connected: Digital Technologies for Inclusion and Growth,” in which it states that public and private investment in digital connectivity can stimulate the regional economy.
In this sense, the vice president of the World Bank for Latin America and the Caribbean, Carlos Felipe Jaramillo, urged the countries of the region to “urgently” find ways to promote inclusion and growth, improve governance and generate social consensus.
“Digital solutions can be part of the answer, helping to complement structural reforms to increase productivity, improve service delivery for the population and support government efficiency. We see here a great opportunity for the region,” he told EuropaPress.
Furthermore, faced with a lower flow of foreign direct investment, the chief economist for Latin America and the Caribbean of the World Bank, William Maloney, regretted that the opportunities of nearshoring (a strategy that consists of outsourcing services or business processes to third parties) are not being taken advantage of. nearby countries), instead of opting for distant countries like China or India, especially in countries like Mexico, which has to establish a clear strategy to address this issue “efficiently.” With Infobae
