Chile, Haiti, and Argentina’s economies will fare worse in 2023, says World Bank

By Juan Pablo Álvarez

According to World Bank estimates, Chile and Haiti will be the only countries in Latin America and the Caribbean to see their Gross Domestic Product (GDP) fall in 2023, while Argentina will end the year neutral.

However, when looking at alternative measurements, more and more economists are projecting a contraction for Argentina during this year due to the drought affecting the countryside of this Rio de la Plata country.

Haiti is expected to suffer a 1.1% drop in GDP in 2023.

The economy of this Caribbean country has been shrinking year by year.

Even in 2021, when practically the whole world had a rebound, Haiti also fell after coming out of the 2020 quarantines (-1.8% on that occasion).

In the case of Chile, the World Bank has been improving its outlook.

Until the report published in January, the Chilean GDP was expected to fall 0.9% in 2023, while the current one expects a contraction of 0.7%.

Since last year, the Chilean government and the Central Bank of Chile (BCCh) have warned that the economy would suffer a slowdown due to the authorities’ efforts to remove the monetary and financial imbalances left by the Covid-19 pandemic.

Argentina, meanwhile, is the country that saw expectations deteriorate the most.

Until January, the country was expected to grow 2%, while the latest World Bank report projects zero growth for 2023.

However, these forecasts seem either optimistic or based on assumptions made before the real extent of the drought that has hit the country became known.

Itaú Unibanco recently prepared a report that estimates that Argentina’s economy will fall by 3% in 2023.

WHAT IS EXPECTED FOR THE REST OF THE REGION

As for the major Latin American economies, Brazil is expected to grow 0.8% in 2023, and Mexico is expected to grow 1.5%.

Among the Spanish-speaking countries, the most significant jump would be in Panama (GDP growth of 5.7%), followed by Paraguay (4.8%), Dominican Republic (4.4%), Honduras (3.5%), Guatemala (3.2%), Nicaragua (3%), Ecuador (3%), Bolivia (2.7%), Costa Rica (2.7%), Peru (2.4%), El Salvador (2.3%), Uruguay (2.8%), Colombia (1.1%).

On the continent, the growth projection for Guyana (25.2%), which has been increasing its GDP by leaps and bounds since the discovery of offshore oil on its marine platform, is once again impressive.

In 2022 it would have had a jump of 57.8%.

LATIN AMERICA AND THE CARIBBEAN WILL GROW LESS THAN A WAR ZONE

The World Bank highlights in its report that while the Gross Domestic Product (GDP) of Latin America and the Caribbean is already well above pre-pandemic levels, future growth is expected to lag behind other regions, including war-torn Eastern Europe.

Growth is not expected to accelerate any time soon.

The recovery’s waning energy and persistent inflation, Russia’s invasion of Ukraine, and uncertainty surrounding China’s recovery from Covid-19 confinement continue to dampen global and regional growth prospects.

The agency details that South America’s growth rate would allow it to regain its low growth trajectory.

However, Central America shows it is, at best, approaching a parallel albeit more downward trajectory than the pre-Covid-19 period.

The Caribbean is recovering from a particularly severe recession, reflecting the partial recovery of its battered tourism industry, which fell 71% in 2020 versus 2019.

The drop in tourism revenue left Caribbean economies in 2022 some ten percentage points below their pre-pandemic potential output due to the slow travel recovery to the region.

This gap is projected to remain around five percentage points in 2024.

With information from Bloomberg