The United Nation’s Economic Comission for Latin America and the Caribbean (ECLAC) bettered its forecast for the economies of the region.
ECLAC expects the regional economy to grow 3.2% in 2022, a considerable jump from its August forecast of 2.7%.
The organization warned, however, that growth might slow down to 1.4% in 2023, pointing to the potential decrease in global consumer demand and climbing interest rates in the United States and Europe.
This “restrictive monetary policy” of advanced economies is already hindering capital flows into Latin America, fostering local currency depreciations and making it more onerous for the region to obtain financing.
Do you want to know how much your country will grow in 2022 and 2023? #ECLAC updated today its growth projections for #LAC. Next year the region will have to face an unfavorable international context once again. All the details here: 👉 https://t.co/0EExhpv2YL pic.twitter.com/MdNkUAtVrP
— ECLAC (@eclac_un) October 19, 2022
Lower growth is expected for all CALA subregions next year, according to ECLAC’s lastest projections. South America would grow by 1.2% in 2023 (versus 3.4% in 2022); the block made up of Central America and Mexico would expand by 1.7% (compared with 2.5% in 2022); and the Caribbean –excluding Guyana– would grow by 3.1%, (versus 4.3% in 2022).
The region “will have to face an unfavorable international context once again,” ECLAC stated, adding that the recessionary trends are less likely to last beyond 2023.
Low growth in China is also hurting South American countries. Chile, Brazil, Peru and Uruguay, for example, ship more than 30% of their merchandise exports to China.
High levels of public debt and rising inflation are a major obstacles for the region’s attempts to cushion the effects of a potential recession in the US.