Growth of 1.6% expected for Latin America and the Caribbean in 2023
The growth was forecast in a report by Atlas Network and the Center for the Study of Economic and Social Reality, although they warned that high levels of debt and government barriers continue to be the main obstacles in the region.
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Atlas Network and the Center for Economic and Social Reality Studies (CERES) jointly prepared a report on economic projections for Latin America and the Caribbean (LAC) for 2023. According to their data, the region will experience growth of 1.6%. However, they warned that the figure is not necessarily positive in the long term, as high debt levels and government barriers remain the main obstacles to increasing the region's productivity.
The report is entitled the Latin Macro Vista Regional Report, and it analyzes the economic outlook for Latin America and the Caribbean (LAC) in 2023 and beyond. After analyzing the March data and projecting for the remainder of the year, the feelings were "mixed." Although the figure is encouraging compared to 2022, growth is "well below its real potential."
The 1.6% increase is possible due to higher prices in critical exports such as oil and moderating inflation in the region's leading economies. "However, LAC countries face challenges such as high levels of public debt and the need for greater trade openness. Nearshoring presents a short-term opportunity, but the consolidation of democracy is necessary to fully capitalize on it," warned Atlas Network and CERES.
Inflation has exploded in Argentina, raising the overall average. Governed by Alberto Fernández and Cristina Kirchner, the country had a year-on-year inflation rate of 102.5% for February 2023, well ahead of Colombia (13.3%) and Chile (11.9%), which ranked second and third.
Public debt rose to 60% of regional gross domestic product (GDP) in 2022, at the same time as the payment of outstanding debt increases interest payments in the future. The report noted a growing trend of indebtedness, which is expected to reach 69% of regional GDP by 2025.
On the other hand, LAC countries have several economies closed off to the world, with high tariff rates. To overcome this problem, the study recommends greater trade integration to achieve medium- and long-term development.
"In Latin America and the Caribbean, there are reasons for optimism and concern about the region's economic outlook," said Dr. Roberto Salinas-León, Executive Director of Atlas Network's Center for Latin America. "While LAC economies are projected to grow in 2023, with 'nearshoring' emerging as a viable short-term policy priority, sky-high public debt levels and existing government barriers only impede progress. LAC policymakers must continue to embrace free-market reforms, without which the region will not reach its full potential," commented Dr. Roberto Salinas-León, Executive Director of the Atlas Network's Latin America Center.
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