Tuesday 31 January 2023

UN lowers its growth prospects in Latin America due to war

Effects of rising fuel and food prices could, however, benefit exporting nations

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28 January 2023 - At The Banks - BCCR

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Q REPORTS (EFE) The Latin American economy will grow 2.3% in 2022, estimated this Thursday the UN Conference for Trade and Development (UNCTAD), which lowered its outlook for the region three-tenths compared to those calculated six months ago, due to the negative effects of the Ukraine war on the global picture.

Effects of rising fuel and food prices could, however, benefit exporting nations

The effects of the rise in fuel and food prices could, however, benefit raw material exporting nations such as Argentina, and in this sense, the UNCTAD report revised upwards the expected growth for the country of the Southern Cone, of 2.9%, calculated in September at 4.6% in the report published today.

The forecast study also raised the percentage of expected growth for Central America and the Caribbean (from 2.9% half a year ago to 3.5%), but lowered its prospects for Mexico by one and a half points (from 2.8% to 1.3%) and reduced its forecast for Brazil by half a point (from 1.8% to 1.3%).

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“Although the growth figures will be substantially reduced compared to the levels achieved in the rebound phase of the pandemic (a good part of last year), the exporters of energy and raw materials, an important part of the regional production, will continue to have growth that make up for the situation,” the report said.

UNCTAD analyzed that consumption in three of the main regional economies, Argentina, Mexico and Brazil, continues to remain below pre-pandemic levels, while in others there has been a strong recovery, as in the case of Chile and Colombia.

On the other hand, the rebound in the raw materials market in the past year has led to the recovery of investments in Brazil, Argentina, Peru and Chile, after the fall in 2020, the UNCTAD study indicated.

However, this warns of the sharp slowdown that could occur in Brazil, “due to an extreme tightening of its monetary policy” and also possibly in Argentina, under the pressure of foreign debt.

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