The Economic Commission for Latin America and the Caribbean (ECLAC) raised this Tuesday its growth forecast for the region for 2022 from 1.8% estimated in April to 2.7%, although it warned that the scenario is “very complex”.
The UN agency, based in Santiago de Chile, said in a new study that “the economic slowdown has been deepened by the effects of the war in Ukraine” and “the growing limitations faced by domestic macroeconomic policy to boost growth”.
To this, ECLAC added, “strong inflationary pressures, the low dynamism of job creation, falls in investment and growing social demands”.
The economies that will expand the most this year are Venezuela (10%), Panama (7%), Colombia (6.5%), Dominican Republic (5.3%), Uruguay (4.5%), Guatemala (4%) Honduras (3.8%), Bolivia (3.5%) and Argentina (3.5%), according to the institution.
In the middle of the table are Costa Rica (3.3%), Cuba (3%), Nicaragua (3%), Ecuador (2.7%), Peru (2.5%) and El Salvador (2.5%), while the countries that will grow the least are Mexico (1.9%), Chile (1.9%), Brazil (1.6%), Paraguay (0.2%) and Haiti (-0.2%).
For the Caribbean, ECLAC estimates an expansion of 10.2% or 4.7% excluding Guyana, which has been experiencing an oil boom for some time.
The region thus returns “to the low growth path it exhibited before the beginning of the pandemic”, the organization underlined in the study “Economic Survey of Latin America and the Caribbean”.
The report also shows that inflation has continued to rise, reaching 8.4% regionally in June, “which is equivalent to more than double the average value recorded in the 2005-2019 period”.
“Although the rise in the price of raw materials has benefited the countries of the region that export primary goods, particularly hydrocarbons and food, for the average of the region a 7% drop in the terms of trade of commodities is projected,” the agency highlighted.
For this year, ECLAC expects the value of regional exports to increase by 22% and imports by 23%, so the surplus in the goods account balance will be lower than in 2021.
After the region was a net recipient of capital last year, the report notes that data available as of the first quarter of 2022 show inflows slowing, mainly due to a “further tightening of global financial conditions,” especially since the war in Ukraine.
The slowdown is also restricting the recovery of labor markets, especially for women: the female unemployment rate went from 12.1% to 10% at the end of the first quarter of the year, a smaller decrease than for men.
Latin America, the region most affected by the pandemic, grew by 6.2% in 2021 as a rebound from the 6.8% slump recorded in 2020, the biggest recession in 120 years.