According to the information provided by the Economic Commission for Latin America and the Caribbean (ECLAC), Panama is the fastest growing economy in Latin America throughout 2023. However, the economies of the region continued to slow down this year and the prospects for next year are not encouraging.
This year it will close with a modest growth of 2.2% of the regional Gross Domestic Product and by 2024 it is projected to be 1.9%, according to the Preliminary Balance of the Economies of Latin America and the Caribbean of 2023.
ECLAC revealed the perspectives included in its report during a press conference held at its headquarters in Santiago, Chile, and transmitted virtually on its social networks at a time when the region faces an unfavorable international economic context in which numerous countries have implemented restrictive monetary policies.
Although the current international context has an impact, ECLAC warned that the slowdown in Latin America takes years.
While between 1951 and 1979 the regional GDP grew at an average of more than 5% per year, between 1980 and 2009 it grew at less than 3% per year and between 2010 and 2024 at an average of 1.6% per year, ECLAC said.
GDP per person, for example, will only recover in 2023 from the level of 2013.
To contain inflation, the most developed countries in the world, including the United States, which is Latin America’s main trading partner, drastically raised interest rates by restricting access to financing and cooling the world’s main economies when they were just taking off after the paralysis caused by the coronavirus pandemic.
The unfavorable external scenario also includes a stagnation of world trade in goods.
The world economy is expected to grow 3% in 2023 and 2.9% in 2024, below the historical average of 3.8% recorded between 2000 and 2019. The United States Federal Reserve estimates that its country’s economy will expand by a modest 1.4% in 2024 and 1.8% in 2025. China, which is the second trading partner in the region, projects growth of 5% this year and 4.2% in 2024, slightly below what it anticipated in the middle of the year although above 3% in 2022.
Although inflation has decreased in a large part of developed countries, their interest rates have not yet been reduced. Consequently, the difficulties of access to financing are expected to continue next year.
At the end of 2023, all Latin American subregions will show lower growth compared to 2022: South America will grow by 1.5% (3.8% in 2022), Central America and Mexico by 3.5% (4.1% in 2022) and the Caribbean (excluding Guyana) by 3.4% (6.4% in 2022), according to ECLAC.
By 2024, the slowdown will continue: South America would grow by 1.4%, Central America and Mexico by 2.7% and the Caribbean by 2.6%.
Argentina and Haiti are the only countries in the region that this year will have negative growth: -2.5% and -1.8%, respectively. By 2024 both will improve, although the South American nation will still have a negative growth of -1%, according to ECLAC forecasts. Haiti will grow by 1% next year.
Chile was on the verge of recession, with a modest growth of 0.1% in 2023 and 1.9% predicted for next year.
In Latin America, Panama was the one that grew the most in 2023, 6.1%, followed by Costa Rica, with 4.9%. Brazil grew by 3% and is expected to fall to 1.6% in 2024; Colombia by 0.9% that would rise to 1.7% in 2024 and Mexico by 3.6% and 2.5% predicted for next year.
As for occupancy, the regional economic organization expects that at the end of 2023 it has grown by 1.4%, equivalent to a reduction of four percentage points compared to 5.4% in 2022. That better job creation will continue in 2024, with an estimated growth of just 1%.
Inflation, meanwhile, fell from a peak of 8.2% in November 2022 to a regional average of 3.8% in 2003. For next year it is expected to be 3.2% although there are countries such as Brazil, Chile, Paraguay and Peru that have managed to take it to a range that is within their goals and others such as Mexico, Colombia and Jamaica that could even see a rise in the coming months, ECLAC said.