The Economic Commission for Latin America and the Caribbean (CEPAL) has revised its 2023 growth forecast for the region to 2.2%, up from 1.7%.
This modest increase points to persistent economic challenges beyond the pandemic’s impact.
Amid global economic slowdown and inflation control, no significant changes in monetary policies are expected from key central banks.
CEPAL anticipates a further increase in regional growth to 1.9% in 2024, surpassing previous estimates.
The report suggests that the region’s challenges are not just temporary. Since 2015, per capita GDP has stagnated or declined.
The sharp drop in 2020 due to COVID-19 is only now showing signs of recovery.
However, levels are not expected to return to those of 2013-2014 until 2023, indicating a “lost decade.”
Employment growth is also slowing. Job numbers are projected to grow by only 1.4% by the end of 2023, a decrease from 5.4% in 2022.
This trend is expected to continue into 2024, with a projected job growth of only 1.0%.
Each subregion in Latin America and the Caribbean will experience slower growth in 2023 compared to 2022.
Guyana, buoyed by its oil exploration boom, is expected to lead with a growth rate of 39.2%. In contrast, Argentina and Haiti are forecasted to face economic contractions.
Growth is lagging behind other emerging regions
Latin America’s modest growth is lagging behind other emerging regions.
The region’s reliance on commodity exports, especially to China, affects its economic stability. Furthermore, political instability in several countries complicates the outlook.
Latin America’s growth is constrained by limited diversification and innovation, unlike Southeast Asian economies.
This reliance on traditional sectors hinders its adaptation to global shifts towards digital economies and green energy.
Structural reforms focusing on productivity, technological adoption, and governance are needed to catch up with more dynamic emerging markets.
The region’s slow job growth forecast points to persistent underemployment and informal labor issues.
Unlike developed economies, Latin America struggles to create quality employment opportunities.
Regional leaders can learn from economies like South Korea and Singapore, which have transformed through education, innovation, and governance reforms.
In conclusion, Latin America’s modest growth forecast for 2023 and 2024 underscores the need for deeper economic and structural changes.
Embracing diversification, innovation, and structural reforms is crucial for the region to become a dynamic and competitive player in the global economy.