Growth in Latin America will fall to 1.8% with war and inflation

RIO DE JANEIRO, BRAZIL – The uncertainties caused by the war in Ukraine on inflation and volatility in the financial system will make the economies of Latin America and the Caribbean grow less in 2022, the Economic Commission for Latin America and the Caribbean (ECLAC) announced on April 27. The organization, linked to the United Nations, reduced the growth forecast for the region from 2.1% to 1.8% this year.

For Brazil, the Gross Domestic Product (GDP) expansion estimate fell from 0.5% to 0.4% in 2022, below the South American continent average. The growth forecast for the South American economies increased slightly, from 1.4% to 1.5%, thanks to improved forecasts in several neighboring countries.

The estimate for economic growth went from 2.2% to 3% in Argentina, from 3.7% to 4.8% in Colombia, from 3.1% to 3.9% in Uruguay, and from 3% to 5% in Venezuela. In contrast, it fell from 1.9% to 1.5% in Chile and from 3% to 2.5% in Peru.

The rest of Latin America also faces an economic slowdown. ECLAC revised the growth forecast for Central America and Mexico from 3.3% to 2.3%. For the Caribbean (except Guyana), the estimate fell from 6.1% to 4.7%.

In a note, ECLAC informed that the economies of Latin America and the Caribbean face a complex situation in 2022 due to the war conflict between Russia and Ukraine. At the regional level, the expected lower growth will be accompanied by higher inflation and a slow recovery in employment. ECLAC also expects that the economic slowdown in the United States, China, and the European Union will affect Latin American exports because of the reduction in external demand for products from the region due to the war conflict.

With information from Agência Brasil