The International Monetary Fund (IMF) warned this Wednesday that the riots and political crises living in different regions of Latin America could have consequences for the economic activity and growth of the continent.
“The continued possibility of unrest and political paralysis has the potential to erode confidence and weigh on economic activity,” the Fund said in an article written by analysts Gustavo Adler, Nigel Chalk and Anna Ivanova.
While not mentioning any of the political crises experienced in recent weeks in countries such as Brazil or Peru, the IMF explains that “the growing social discontent and declining trust in public institutions has long been a major trend in the region.”
“Social tensions have certainly been exacerbated during the pandemic. Poorer people, particularly those working in face-to-face services, have borne the brunt of the economic fallout. While government support has helped, many have not been able to able to isolate themselves completely from the negative shock, as evidenced by the marked increase in poverty,” the article adds.
IMF analysts explain that, despite the fact that the region’s economy grew by almost 3.9% in 2022, inflation decreased and employment recovered strongly, “2023 risks being a challenging year for the region”.
The agency released its latest global growth forecast this week, and it took notice Latin America and the Caribbean to grow 1.8%, below the global average of 2.9%. Even in 2024, when it will grow by 2.1%, compared to the world average of 3.1%.
This will be due to, among other reasons, higher interest rates, falling commodity prices, slowing job creation, weakening consumer confidence and lower trade growth of its partners , especially the United States. States and the Eurozone.
recommendations
Despite the “obvious difficulties”, policies “should focus on ensuring economic stability, stimulating growth and job creation, supporting entrepreneurship and addressing the pressing social needs faced by many people in the region,” he said the minister.
“This will help mitigate social unrest and restore trust in public institutions,” he estimates.
The IMF also says that central banks should not reduce their resolve to reduce inflation and that fiscal policy “should emphasize social spending to support the poor while reducing public debt”.
“Achieving these goals will require mobilizing revenue in a progressive, growth-friendly and equitable manner. Trust in government will continue to be undermined until the wealthy pay their fair share of taxes,” the article said.
forecasts
The text is accompanied by detailed forecasts for the different countries of the region; Therefore, Mexico will grow by 1.7% in 2023 and next year by 1.5% in 2024.
For Argentina, growth of 2% is estimated in 2023, a figure similar to that of 2024; Chile, on the other hand, will decrease by 1.5% in 2023 and grow by 1.9% a year later.
Colombia 1.1% and 2.1%; Ecuador 3% and 2.8%; Uruguay 3.6% and 2.7%; Peru 2.5% and 3.2%; Costa Rica 2.9% and 3% and Panama 4% both years.
As for inflation, after registering 7.9% in 2022 (excluding the volatile Argentina and Venezuela), the IMF estimates that it will average 5.2% in the region in 2023 and 3.4% in 2024 %.
Source: EFE
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Source: Clarin
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