Global Uncertainty and Restrictive Policies Impact Latin America
Global Uncertainty and Restrictive Policies Impact Latin America
Sunrise, Fl – August 14- 2024
Global uncertainties and restrictive policies are influencing Latin America’s economic outlook. The Economic Commission for Latin America and the Caribbean (ECLAC) has downgraded its growth forecast for the region to 1.8% for this year, down from the 2.1% projected in May. This adjustment reflects a moderate global growth outlook and a potentially less favorable economic landing than previously expected.
In the 76th Economic Study presented by ECLAC, Daniel Titelman, Director of Economic Development, noted that these forecasts are influenced by climate change impacts and geopolitical uncertainties. The average country in the region is facing fiscal and monetary constraints that limit expectations for economic stimulus.
Titelman anticipates continued interest rate cuts from central banks, which initially adopted looser monetary policies. However, he warns that the restrictive stance will likely deter consumption, investment, and financing. Additionally, Titelman highlighted the potential effects of a U.S. economic slowdown on trade and remittances in Mexico and Central America, as well as the importance of Spain’s performance in sending remittances to South America.
During the study presentation, Executive Secretary José Manuel Salazar Xirinachs noted that only four countries in the region saw increased economic activity in the first half of the year: the Dominican Republic, driven by tourism with a projected growth rate of 5.2%; Chile, boosted by the mining sector with a growth forecast of 2.6%; Peru, benefiting from the recovery of the fishing sector, also with a 2.6% growth forecast; and Costa Rica, with positive performance in services and medical equipment investment.
Guyana was also mentioned, with a remarkable 29.2% growth due to oil discoveries. However, its impact on the region remains limited due to its relatively small economic size.
The two largest economies in the region, Brazil and Mexico, which account for 57% of the regional GDP, are expected to provide only modest contributions to Latin America’s overall growth this year. Mexico’s growth estimate has been revised down to 1.9% from 2.5% previously. For Brazil, the largest economy in the region, a growth rate of 2.3% is anticipated, consistent with May’s forecast.
At the opposite end, Haiti and Argentina are projected to experience recessions this year, marking them as exceptions in the current economic landscape.
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