IMF raises Latin America’s GDP to 2.5% in 2022, but lowers global projection

The International Monetary Fund (IMF) increased by one-tenth to 2.5%, are growth forecasts for the GDP for Latin America and the Caribbean in 2022while warning of strong inflationary pressures the region will experience, partly as a result of the war being waged in Ukraine.

In its most recent World Economic Prospects Report, which serves as an update on its forecasts as of the beginning of the year, the Fund is increasing its forecast for inflation for this area to 11.2% in 2022, compared to 9.8% in 2021, although it puts a pause for 2023 and predicts that prices will moderate slightly and rise by 8%.

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In addition, because of the war in Ukraine and high inflation, it cut its previous growth forecast for the global economy by eight-tenths for 2022, to 3.6%, compared to the 4.4% forecast in January.

The report, released Tuesday in the context of the spring meeting of the IMF and the World Bank, also cuts Latin America and the Caribbean’s gross domestic product (GDP) growth forecast for 2023 by a tenth, to 2.5 % (same percentage as venture for 2022), in both cases far from the 6.8% the area’s economy grew in 2021.

As for the two main regional economies, the report specifies that Mexico will grow by 2% this year and 2.5% in 2023 (respectively eight-tenths and two-tenths less than the previous projections), while for Brazil a growth of 0. 8% is forecast in 2022 and 1.4% in 2023 (five tenths more and two tenths less).

In March, the Fund’s director, Kristalina Georgieva, foresaw that the conflict in Ukraine could represent an economic opportunity for some food-exporting countries in the region, given dwindling Russian and Ukrainian competition.

Despite these opportunities, the IMF director also warned of risks such as the rise in energy prices or the shortage of fertilizers, of which Russia and Belarus are major exporters, while Brazil is one of the largest importers.

Likewise, he warned that Russia’s invasion of Ukraine would worsen the inflationary situation in Latin America because of its pressure on energy prices, in addition to posing risks to the region’s supply.

In this regard, Georgieva recalled that inflation was already skyrocketing in many Latin American countries before the war in Ukraine due to their difficulties in recovering from the recession caused by Covid-19.

Source: El heraldo