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Latin America will grow more than average this year but will suffer in 2023

The economy in the continent and the Caribbean will grow by only 1.7% on average in 2023, less than in 2022
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Latin America will resist this year the strong global impact of the war in Ukraine and the last throes of the pandemic, and will grow by 3.5%, above the global average, although in 2023 the region will be dragged down by poor data from its trading partners, according to the International Monetary Fund (IMF).
 
The organisation has published its latest World Economic Outlook Report on Tuesday, in which it revises the growth projections it made last April, and improves those for Latin America by half a point, to 3.5 % (3 tenths more than the world as a whole), although it lowers the figure for next year by three tenths, to 1.7 %.
 
"We have a region that has done quite well," IMF research director Pierre Olivier Gourinchas told a press conference, highlighting the fact that some countries, including Brazil, "have tightened monetary policy well ahead of the advanced economies".
 
"They were ahead of the curve, and some of them were also supported by high energy and commodity prices, which provided a cushion," he added.
 
Thus, the report notes, this year's improved performance will be made possible by favourable commodity prices, still-good external financing conditions and the normalisation of activities in "contact-intensive sectors" such as hotels and food, which were once the hardest hit by the pandemic.
 
However, growth in the region is expected to slow later this year and in 2023, as growth in partner countries weakens, financial conditions tighten and commodity prices weaken.
 
Thus, the economy in Latin America and the Caribbean will grow by an average of only 1.7 % in 2023, half of what was expected for the current year and a far cry from the 6.9 % achieved in 2021.
 
The IMF paints a bleak picture for the region's main trading partners: the United States, China and Europe. It has lowered its growth forecasts for the United States by seven tenths of a percentage point to 1.6 % and maintained the figure for the coming year at 1 %.
 
China will grow less than expected, 3.2 % this year - a figure that represents a sharp deceleration with respect to the 8.1 % reached in 2021 - and 4.4 % in 2023.
 
The euro area, for its part, will grow by 3.1 % in 2022 (half a percentage point more than forecast in July) but will slump to 0.5 % next year (seven tenths of a percentage point less than previously estimated).
 
Of the two main economies of Latin America and the Caribbean, Mexico and Brazil, the North American country will grow by 2.1 % this year (three tenths of a percentage point less than estimated last July) and by 1.2 % next year, a percentage that has not changed.
 
As for Brazil, it will grow by 2.8% this year, 1.1 percentage points more than estimated in July, while in 2023 it will slow down to 1% (one tenth of a percentage point less than previously forecast).
 
Inflation continues to run rampant
 
In its report, the organisation headed by Bulgaria's Kristalina Georgieva also provides data on inflation prospects and estimates that prices in Latin America and the Caribbean will rise by an average of 14.1 % this year.
 
In 2023, living costs in the region will continue to rise by 11.4 %, and in five years' time, in 2027, the main price indicator is expected to stand at 5.7 %.
 
These estimates, the IMF specifies, include Argentina but not Venezuela, two of the countries with the most volatile prices in the region, since 2017.
 
The deputy director of the Fund's Research Department, Petya Koeva, pointed out at the press conference that Latin America is precisely a region that is "very exposed to the evolution of commodity prices", whose economy is highly dependent on external demand, remittances and tourism.