ECLAC: This Will Be the Economic Growth of Latin America by 2023

The Economic Commission for Latin America and the Caribbean (ECLAC) raised this Tuesday its regional GDP growth projection for 2023 from 1.2%, estimated last April, to 1.7%, but warned that the global macroeconomic scenario it is still "complex".

The United Nations agency, based in Santiago, Chile, explained in a new report that the world economy "remains on a path of low economic growth" and that "developed countries will continue with their contractive monetary policies," despite falls in inflation rates.

"It is not possible to expect a significant drop in external interest rates this year, and financing costs for our countries will remain high ," said ECLAC, which for 2024 projects an expansion of regional GDP of 1.5%.

The low growth of 2023 and 2024 will result in a slowdown in employment, which will grow only 1.9% in 2023 and 1.1% in 2024 , according to the document "Economic Study of Latin America and the Caribbean, 2023. The financing a sustainable transition: investment to grow and face climate change".

The region will also have "limited" fiscal space, due to the high levels of public debt, the increase in internal and external rates and the fall in tax revenues as a result of lower growth, the agency said.

"The low growth of Latin America and the Caribbean could be aggravated by the negative effects of a worsening of climatic shocks, if the investments in adaptation and mitigation to climate change that the countries require are not made," he said during the presentation of the study the executive secretary of ECLAC, José Manuel Salazar-Xirinachs.

Argentina, Haiti and Chile: The only ones that decrease

Panama (5.1%), Paraguay (4.2%) and the Caribbean islands (4.2%, not including Guyana) will lead economic growth this year , followed by Costa Rica (3.8%), Dominican Republic (3.7%). Honduras and Guatemala, both with an expansion of 3.4%.

In the middle of the table are Venezuela (3.2%), Mexico (2.9%), Brazil (2.5%), Nicaragua (2.4%), Ecuador (2.3%), Bolivia ( 2.2%) and El Salvador (2.1%).

In the tail, but still with positive figures, are Cuba (1.8%), Peru (1.3%), Colombia (1.2%) and Uruguay (1%), while Chile (-0.3% ), Haiti (-0.7%) and Argentina (-3%) are the only ones that will decrease this year, according to the United Nations organization.

Latin America, the most unequal region in the world and the one most affected by the pandemic, grew 6.9% in 2021, as a rebound after the 6.8% collapse registered in 2020, the biggest recession in 120 years.

The slowdown in the region began in the second half of 2022, which closed with an estimated growth of 3.7%, according to ECLAC.

Also read: The Business Climate In Latin America Rises To Its Best Level In Two Years

The climate cost

In the second part of the report presented this Tuesday, the agency analyzes the consequences of climate change on regional economies and possible financial mechanisms to facilitate investments in order to have resilient economies.

"As a result of the worsening of climatic shocks, in 2050 the GDP of six countries in the region, highly exposed to the risks of climate change, could be between 9% and 12% less than that corresponding to a growth scenario trend ", indicates the document.

To compensate for these losses, ECLAC added, additional investments would be required "exceptionally large, between 5.3% and 10.9% of GDP per year."

"Given the challenges of boosting growth and tackling climate change, it is essential to boost public and private investment. Public investment in the region is low compared to advanced economies, and even compared to other developing regions," said Salazar-Xirinachs.