IN its final annual report for the year, the Economic Commission for Latin America and the Caribbean (ECLAC) unveiled the Preliminary Overview of the Economies of Latin America and the Caribbean, 2023.

The report paints a sobering picture, predicting that the region is set to experience a trajectory of low growth, resulting in decelerated job creation, persistent informality, and gender gaps, among other repercussions.

Presenting the report on Thursday at a press conference, Executive Secretary of the United Nations regional commission, José Manuel Salazar-Xirinachs, highlighted key findings.
According to the report, Latin America and the Caribbean are anticipated to grow by an average of 2.2per cent in 2023 and 1.9per cent in 2024, signifying a slowdown from the growth levels observed in 2022. While all subregions are expected to experience reduced growth in 2023, the report underscores the heterogeneity among countries in the region. South America is projected to grow by 1.5per cent (compared to 3.8per cent in 2022), Central America and Mexico by 3.5per cent (down from 4.1per cent in 2022), and the Caribbean (excluding Guyana) is forecasted to grow by 3.4per cent (versus 6.4per cent in 2022).

Looking ahead to 2024, the region is anticipated to maintain this low-growth trend, with all subregions growing less than in 2023. Projections include South America expanding by 1.4per cent , Central America and Mexico by 2.7per cent , and the Caribbean by 2.6per cent (excluding Guyana).

The report attributes these projections to sluggish economic growth and global trade dynamics, resulting in limited impetus from the global economy. Despite a decline in inflation, interest rates in major developed economies remain high, impacting financing costs throughout the region.

The constrained growth is also linked to limited domestic fiscal and monetary policy options. While public debt levels have decreased, they remain high, restricting fiscal space. Monetary policy continues to have a restrictive bias due to concerns about the potential effects of rate cuts on capital flows and exchange rates, given the prevailing high interest rates in developed countries.
Inflation in the region is expected to average 3.8 per cent by the end of 2023, significantly lower than the 8.2per cent recorded in 2022. The report further predicts a continued decline in inflation, with the average regional rate estimated at 3.2per cent in 2024.

ECLAC estimates a 1.4per cent growth in the number of employed persons in 2023, representing a four percentage-point drop from the 5.4per cent recorded in 2022. This lower rate of job creation is expected to persist in 2024, with a projected growth of 1.0per cent .

To break free from the low-growth trap, Salazar-Xirinachs emphasised the need for productive development policies, strategic investment, and an adjusted financing framework. The report also calls for complementary macro and financial policies to manage financial and foreign-exchange risks, stimulate domestic resource mobilization, and address inequalities, including gender disparities.

ECLAC concludes by advocating for international financial and tax reforms to support the region in achieving Sustainable Development Goals by directing resource mobilisation toward regional development initiatives.