Latin America will grow slightly in 2023, but will have high inflation: IMF

The document estimates that the region will grow by 1.6% in 2023two-tenths below what was previously expected, and a far cry from the 4% growth it recorded in 2022.

And it is that many Latin American countries are commodity exporters, something that played in their favor last year, thanks to the increase in food or fuel prices due to the Russian invasion of Ukraine, but that will hamper their growth this year.

“2022 was the year when commodity prices started to rise and then started to fall, and they are expected to fall even more in 2023,” explains the IMF research director. Pierre-Olivier Gourinchasin conversation with journalists.

This, coupled with aggressive rate hikes by many central banks to curb inflation, has taken “some momentum” out of the region as governments begin undoing some of the fiscal support programs they adopted during the pandemic.

Overall, Latin America has shown itself to be “very resilient” to the challenges of recent years, said the Fund’s deputy director of research. Petya Koeva-Brooks.

In the case of employment, “we are already seeing levels above pre-pandemic levels,” he assured.

However, inflationary pressures will remain high in many countries, especially in Argentina, where the agency expects inflation to exceed 98% for 2023, or in Venezuela, where it will reach 400%.

The major economies of the region will show very subdued growth in 2023, in line with the outlook for the global economy.

It’s the case of Mexicowhich will grow by 1.8% in 2023, following a 3.1% increase in gross domestic product (GDP) in 2022.

The figure will moderate further in 2024 to 1.6%, as inflation moves from 6.3% this year to 3.9% next year.

Chili, For its part, it is the only Latin American country to experience a recession, according to IMF figures, which expects a loss of one percentage point of GDP by 2023.

The country will recover in 2024 and is projected to grow at 1.9%. By then, inflation will reach 4%, after falling to 7.9% this year.

Colombia it will experience very moderate growth of 1% in 2023 and 1.9% in 2024. Inflation will rise to 10.9% this year, but will decrease to 5.2% next year.

Source: El heraldo

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