IMF raises Latin America’s growth outlook to 2% by 2024

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By LatAm Reports Editor

The International Monetary Fund (IMF) on Tuesday raised the outlook for economic growth in Latin America and the Caribbean by 2024 by 2 percent, or 0.3 points below the 2023 figure due to the situation in Argentina.

Its latest global economic outlook report (WEO) updates the one released in January and hardly varies the data from then on. The January document was the first with data from Argentina since Javier Milei’s arrival in power.

Compared to October 2023, however, the 2024 forecast is three tenths lower, while that of 2025, of 2.5 per cent, improves by one tenth.

In 2023 the Latin American and Caribbean region grew by 2.3 per cent, meaning that these new estimates by 2024 foresee a slight slowdown in the economy before taking momentum again.

In January, the slowing pace of growth in 2024 was attributed to the fall in GDP in Argentina, which then stood at -2,8 %, although by 2025 an increase of 5 per cent was expected there. This April’s figures do not change the forecasts of then.

Estimates for the region’s two main nations, Brazil and Mexico, offer divergent paths.

Brazil is expected to increase GDP of 2.2 per cent this year and 2.1 per cent in 2025, representing respective increases of five and two tenths over last January, and Mexico is expected to grow by 2.4 per cent in 2024 and 1.4 per cent next year, implying a downward revision of three tenths in the first case and one in the second.

The growth now predicted by the organization for both countries does not exceed the figures of 2023, when the Brazilian economy rose by 2.9 percent and the Mexican economy by 3.2 percent.

The IMF specified that moderation in Brazil is due to fiscal consolidation, the effects of a still restrictive monetary policy and a lower contribution of agriculture, while in Mexico it is justified in weaker results than expected by the end of 2023 and the early 2024, with a contraction of the manufacturing sector.

With the exception of Argentina, on the other hand, there is no South American country that appears negative this year. Venezuela will experience the highest expected rise of 4 per cent, which does not change that of 2023, and is followed by Paraguay (3.8 per cent), Uruguay (3.7 per cent), Peru (2.5 per cent), Chile (2 per cent), Bolivia (1.6 per cent), Colombia (1.1 per cent) and Ecuador (0.1 per cent).

Only Uruguay, Peru and Colombia improve their data from 2023. By 2025, the IMF expects GDP to be back at 3.8 per cent in Paraguay, at 3 per cent in Venezuela, 2.9 per cent in Uruguay, 2.7 per cent in Peru, 2.5 per cent in Colombia and Chile, 2.2 per cent in Bolivia and 0.8 per cent in Ecuador.

The body led by Bulgarian Kristalina Georgieva, which released these figures in the framework of the IMF’s spring meetings with the World Bank this week in Washington, projects that South America’s GDP will increase from 1.5 per cent in 2023 to 1.4 per cent in 2024 and 2.7 in 2025.

In Central America it considers that there will be a slowdown, from 4.2 per cent from 2023 to 3.9 and 3.8 per cent in 2024 and 2025, while in the Caribbean it contemplates a boost this year (9.7 per cent), compared to the 8.3 per cent advance in 2023, but by 2025 it reduces the increase to 6.9 per cent.

Haiti, the poorest country in the region and immersed in a crisis of misgovernment that seems to have no end, will chain contractions of 4 % of GDP and the IMF does not believe it will recover in the next five years.

The IMF forecast for 2024 and 2025 in Latin America and the Caribbean is well below that anticipated for all emerging markets and developing economies, which in both years stands at 4.2 per cent, and also that projected for the global economy, which in both cases is 3.2 per cent.

The Fund’s chief economist, Pierre-Olivier Gourinchas, said last week in a call with journalists that one of the factors that can change the profiled scenario, in addition to geopolitical tensions, is persistent inflation.

After an increase in prices of 14.4 per cent in 2023 in Latin America and the Caribbean, growth of 16.7 per cent is expected in 2024 and decreased to 7.7 per cent in 2025. In Argentina alone, the IMF expects inflation of 249.8 per cent this year, before falling to 59.6 per cent next year.