ECLAC forecasts one more point of GDP for Latin America but sees its “complexity”

The war in Ukraine, the strong inflationary pressures, the low dynamism of job creation, the falls in investment and growing social demands will lead Latin America to grow only 2.7% this year, ECLAC revealed on Tuesday.

Despite raising its growth estimate by almost one point (last April it projected 1.8%), the Economic Commission for Latin America and the Caribbean (ECLAC) warned in its latest report that the scenario for the region is ” Too complex”.

“Sixteen of the 33 countries in the region have not recovered their pre-pandemic gross domestic product (GDP) levels,” Mario Cimoli, interim executive secretary of the UN organization, based in Santiago de Chile, told a press conference.

The economies that will expand the most this year are Venezuela (10%), Panama (7%), Colombia (6.5%), the Dominican Republic (5.3%), Uruguay (4.5%), Guatemala (4% ) Honduras (3.8%), Bolivia (3.5%) and Argentina (3.5%), according to the report “Economic Study of Latin America and the Caribbean”.

In the middle of the table are Costa Rica (3.3%), Cuba (3%), Nicaragua (3%), Ecuador (2.7%), Peru (2.5%) and El Salvador (2. 5%), while the countries that will grow the least will be Mexico (1.9%), Chile (1.9%), Brazil (1.6%), Paraguay (0.2%) and Haiti (-0.2 %).

For the Caribbean, ECLAC estimates an expansion of 10.2% or 4.7% without counting Guyana, which has been experiencing an oil boom for some time.

“Although some countries in the region -mainly the net exporters of energy- have benefited from the high price of these products in international markets, in most they are experiencing falls in the terms of trade,” the study stated.

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The director of the Agency’s Economic Development Division, Daniel Titelman, explained at the same press conference that the increase in the forecast is due only to “adjustments in the behavior of consumption” and that the region is heading “to the path of low growth that it exhibited before the start of the pandemic.

“Brazil, for example, had a stronger first half than expected and that affects the national average, but the message does not change: the region is on track to repeat the low growth of before the pandemic in a more complicated global context. “, he added.

The region, with 626 million people and considered the most unequal in the world, faced the pandemic at a time when its economy was weak, with growth that barely reached a rate of 0.1% in 2019.

After the 6.8% crash registered in 2020, the biggest recession in 120 years, the region grew by 6.2% rebound last year.

The report also shows that the war in Ukraine has continued to impact inflation, which reached 8.4% regionally in June, “which is more than double the average value recorded in the 2005-2019 period.”

“Although the rise in the price of raw materials has benefited the countries of the region that export primary goods, particularly hydrocarbons and food, for the average of the region a fall of 7% is projected in the terms of trade of products basics”, highlighted the agency.

For this year, ECLAC expects the value of regional exports to increase by 22% and that of imports by 23%, so the surplus in the balance of the goods account will be less than in 2021.

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After last year the region was a net recipient of capital, the report indicates that the data available for the first quarter of 2022 show that the inflow of flows is slowing down, mainly due to a “greater tightening of global financial conditions”, especially all from the war in Ukraine.

Cimoli warned, however, that the scenario may improve if the war in Ukraine ends, but not completely solved.

“We are entering a period where industrial and productive policies are very sovereign, it is not the same model as before the pandemic. The end of the war would help a lot, but you have to think that things have changed forever,” he said.

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