RIO DE JANEIRO, BRAZIL – The war in Ukraine provokes a new downgrade to regional economic growth projections. On April 27, the Economic Commission for Latin America and the Caribbean (ECLAC) delivered its latest estimates projecting that the region will grow 1.8% on average this 2022.
It is less than January’s forecast when regional growth was estimated to be 2.1% this year.
The organization points out that the main factor for the slowdown is the complex situation due to the conflict in Russia and Ukraine, which has caused global uncertainty and an increase in volatility and financial costs. It also warned of higher inflation and a slow recovery of employment.
For Chile, it estimated GDP growth of 1.5% for this year, down from its projection of 1.9% at the beginning of the year.
Meanwhile, South American economies will grow by 1.5% this 2022, those of Central America plus Mexico by 2.3%, and those of the Caribbean -excluding Guyana- by 4.7%.
IMPACT ON TRADE
According to ECLAC, this year, the war is also expected to have an impact on the dynamics of world trade, causing a decrease in external demand from Latin America and the Caribbean since its main trading partners -the United States, China, and the European Union- will also see a drop in their growth rates.
As for the increase in commodity prices, the agency notes an increase mainly in hydrocarbons, some metals, food, and fertilizers. Although the war would cause them, the rise would also be explained by the disruption in the supply chain and interruptions in maritime transport.
Regional inflation in March is estimated at 7.5% and is expected to remain high for the rest of the year. Meanwhile, labor markets continue with a “slow and incomplete” recovery, and the unemployment rate is expected to rise during 2022.