World Bank: GDP in LAC expected to grow 1.4% this year

The World Bank estimates that the economy of Latin America and the Caribbean will grow by 1.4% this year, at “a lower-than-expected rate, the lowest in the world. The reasons behind the worsening prospects are the lower price of commodities, higher interest rates in developed countries, and the unstable recovery in China.

According to the institution, a 2.4% growth is expected in 2024 and 2025, which is still considered insufficient for “significant progress in poverty reduction.” The World Bank, on the other hand, believes that the region’s economies have been “relatively resilient in the face of increased debt pressure, inflation, and increased global uncertainty.”

The forecast for Latin America and the Caribbean’s Gross Domestic Product (GDP, the sum of goods and services produced) is included in the report The Potential of Integration, Opportunities in a Transforming Global Economy, released this Tuesday (4) by the international financial institution.

According to the Chief Economist for Latin America and the Caribbean at the World Bank, William Maloney, the Latin American region remains one of the least integrated internally. At the same time, trade openness and foreign direct investment flows have been stagnant or reduced over the past 20 years.

“Leveraging the region’s extraordinary comparative advantage in sustainable energy production, commodities needed for emerging green industries, and the region’s unique natural capital offers a potential new source of growth but will require policies to facilitate access to markets, capital, and technology,” he evaluated.

The WB report suggests a series of public policies that could help with regional integration. In the long term, these policies should reduce systemic risks, increase investments in traditional and digital infrastructure, and improve human capital. In the short term, the suggestions revolve around preserving general stability by promoting customs and transport regulatory advancements and modernizing export and investment promotion agencies.

Inflation

The World Bank assesses that, after recovering from the pandemic, the region managed “with relative success” the multiple crises caused by Russia’s war against Ukraine and the uncertainties of the global economy. According to the report, both poverty and employment have returned to pre-pandemic levels, while average inflation, except for Argentina and Venezuela, should fall to 5% in 2023 after reaching 7.9% in 2022, lower than Organization for Economic Cooperation and Development (OECD) countries, 9.4%, and Eastern Europe, 18.8%, although above East Asian inflation (4.7%).

However, on average, the fiscal imbalance remains high, and debt levels are estimated to reach 64.7% of GDP this year, down slightly from 66.3% in 2022.

Source: Agência Brasil

To read the original news report, please refer to: https://agenciabrasil.ebc.com.br/economia/noticia/2023-04/pib-da-america-latina-e-caribe-deve-crescer-14-este-ano

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