Narayan AmmachchiLatin America is projected to experience the slowest economic growth of all regions globally, according to the latest economic forecast of the World Bank.
Latin America and the Caribbean are expected to grow 1.6% this year, slightly below the 2% projected by the World Bank in its previous report, published in October 2023.
The World Bank expects the region to accelerate its economic growth to 2.6% and 2.7% in 2025 and 2026, respectively. Unfortunately, that won’t be enough for the region to grow further and create the jobs needed for graduates coming through the pipeline.
#LatinAmerica and #Caribbean have recovered the lost GDP due to the impact of the pandemic. However, economic growth is once again lagging behind all other regions.
Download our new report and learn more about the economic reality of the region: https://t.co/CNmN1wuw6v pic.twitter.com/g6Pso0dII2
— World Bank (@WorldBank) April 16, 2024
“While the region has made significant progress in economic stabilization over recent decades, growth has stalled, undermining progress. Urgent action is needed to reverse course,” the World Bank noted in its report.
Carlos Felipe Jaramillo, the World Bank’s VP for Latin America and the Caribbean, highlighted that the persistence of poor growth will hamper public services, generate fewer job opportunities, lower salaries and increase poverty and inequality.
Kevin Maloney, Chief Economist of the World Bank, emphasized the region’s growth rates resemble those seen in the 2010s. This indicates that persistent obstacles, such as low education levels, inadequate infrastructure and high investment costs, which contribute to social discontent, haven’t been properly overcome.
The report also warns of external factors further dampening prospects, such as geopolitical tensions, disruptions in global trade routes like the Suez Canal and the El Niño weather phenomenon.
Maloney stressed the importance of seriously addressing the region’s shortcomings to drive growth and attract investments, highlighting opportunities such as nearshoring and transitioning to a low-carbon economy.
On a positive note, the region has managed inflation well, reflecting decades of solid macroeconomic reforms. Regional inflation (excluding that of Argentina and Venezuela) stands at 3.5%, compared to a 5.7% average among OECD countries.
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