The economic panorama of Latin America does not look encouraging for ECLAC and once again the region is headed for a “lost decade”.
The Economic Commission for Latin America and the Caribbean assured this Tuesday that the prospects are complex and expects low regional growth to continue for at least the next two years, following the same path as a large part of the world’s most advanced economies.
The Gross Domestic Product would grow in the region by 1.7% in 2023 and even less in 2024, 1.5%, according to ECLAC’s economic growth projections that appear in a new report revealed at a press conference held at the organization’s headquarters in Santiago, Chile, and transmitted virtually through social networks.
If the 10 years between 2014 and 2023 are analyzed, the average growth would be even less than the 2% recorded during the so-called crisis of the 1980s, a period known as the first lost decade in the region.
“With this disease of low growth… it will be very difficult to reduce poverty, informality, inequality and also create quality employment,” said the executive secretary of the regional organization, José Manuel Salazar-Xirinachs, when announcing the regional perspectives. “There are many things that are at risk: we can lose social peace, we can have societies that are increasingly unequal and more violent, we are going to have millions more people migrating,” he warned.
The perspectives were released at a time when Latin America faces a complicated scenario, both internally and in the international context, with high inflation, high interest rates, large public debt, falling investment and growing demands and social unrest. .
At the international level, financial uncertainty and the slowdown in growth and trade persist. For 2023 and 2024, global GDP is expected to grow by 3%, less than the 3.5% in 2022.
José Manuel Salazar-Xirinachs, executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC). Photo EFE
The perspectives appear in the new 302-page “Economic Study of Latin America and the Caribbean 2023. Financing a sustainable transition: investment to grow and face climate change”, released by ECLAC on Tuesday.
Although the slowdown persists, the 1.7% regional growth forecast for 2023 represents an upward revision compared to the 1.2% that ECLAC had predicted in April. The reason: better economic performance than expected in the economies of Mexico and Brazil, the two largest in Latin America.
Growth forecasts represent a slowdown for all subregions when compared to 2022: South America would grow 1.2% in 2023 and the same in 2024 compared to 3.7% in 2022; Central America and Mexico 3% in 2023 and 2.1% in 2024 (3.4% in 2022); and the Caribbean, excluding Guyana, 4.2% this year and 2.8% in 2024 (6.3% in 2022).
The impact will be felt in various sectors, including employment.
“The outlook is not very optimistic for the labor markets of Latin America and the Caribbean,” ECLAC said in its report. He explained that the number of unemployed in the region could increase by 1.9% in 2023 and 1.1% in 2024, which represents a significant slowdown compared to the 5.4% growth in 2022.
ECLAC predicts that the regional unemployment rate, meanwhile, will be 6.8% in 2023 and 7.1% next year. In 2022 it was 7%.
“There is concern about the quality of employment in the region,” said the organization, after explaining that a context of low growth makes “workers more vulnerable, have lower levels of social protection and are employed in increasingly less productive sectors ”.
This, in turn, would lead to a reduction in average wages and an increase in poverty and inequality in the region, ECLAC indicated in its report.