World Bank forecasts 1.6% growth for Latin America and the Caribbean 

Photo of author

By LatAm Reports Editor

The agency says they are the lowest rates compared to other regions of the world and are insufficient to boost prosperity and reduce the problems of inequality and poverty.

Latin America and the Caribbean is still far from achieving growth figures that will enable it to overcome the problems of social and economic inequality, in addition to poverty.

The World Bank indicated that the region will have a growth rate of gross domestic product of just 1.6 per cent this year and by 2025 it will reach 2.7 per cent, while by 2026 the estimate points to growth of 2.6 per cent.

The multilateral agency’s analysis states that these are the lowest rates compared to all other regions of the world and insufficient to boost prosperity.

The World Bank warns that many households are under pressure because social transfers are falling and wages have not yet recovered to pre-pandemia levels.

The low level of growth, on a sustained basis, is not only an economic statistic but a barrier to development. It translates into small public services, fewer employment opportunities, depressed wages and greater poverty and inequality. When economies stagnate, the potential of their people is limited. We must act decisively to help Latin America and the Caribbean break with this cycle,” said Carlos Felipe Jaramillo, World Bank vice president for Latin America and the Caribbean.

The World Bank report details that the economies of Argentina and Haiti will fall this year by -2.8% and -1.8% respectively. While the countries that will have the highest growth will be Guyana with 34.5%, the Dominican Republic 5.1%, followed by Saint Vincent and the Grenadines with 5%, Dominica 4.6%, Costa Rica 3.9% and Paraguay with a rate of 3.8%.

The World Bank estimates that this year countries with the largest economies will have moderate growth with the exception of Argentina that will record a contraction.

In detail Brazil’s economy is expected to grow just 1.7% of Chile 2%, Colombia 1.3%, Mexico 2.3% and Peru 2.7%.

The agency says the factors behind these figures include low levels of investment and domestic consumption, high interest rates and high fiscal deficits, falling commodity prices and uncertainty in the prospects of major partners such as the United States, China, Europe and other G7 countries.

In addition to an adverse global scenario, marked by geopolitical tensions, disruptions in transport through the Suez Canal and the El Niño phenomenon, which could further harm regional perspectives.

With regard to inflation, the World Bank said that excluding Argentina and Venezuela stood at 3.5%, compared to 5.7% in OECD countries (Organization for Economic Cooperation and Development).

Economics in Latin America and the Caribbean will grow just 1.6% in 2024 according to the World Bank William Maloney, chief economist for Latin America and the Caribbean at the World Bank.

In most countries, inflationary expectations remain anchored and central banks are expected to reach their targets by 2024. To capitalize on this progress and revive economies, the region must address long-standing challenges. Infrastructure, education and trade reforms are essential for improving productivity and integration into the world, the report of the multilateral agency says.

As the impact of the pandemic goes back, the region’s growth rates return to the levels of the 2010s. This shows that the region has not addressed the persistent problems that block its potential, including low levels of education, poor infrastructure and high investment costs, which also fuel social discontent, said William Maloney, chief economist at the World Bank for Latin America and the Caribbean.

He insists that an agenda is needed to drive growth to reduce the gaps in the region. Otherwise, the region will be stagnant and will not be able to attract investment or take advantage of new opportunities, such as the relocation of industries or the low-carbon economy. Improving competition systems should be part of these strategies, which would benefit consumers and businesses, Maloney said.

This article has been translated from the original which first appeared in Prensa