The United Nations agency adjusted its estimates for the region for this year and next, warning as a result of the persistence of high levels of informality and large gender gaps.
Latin America still faces a situation of economic weakness that will be a test for governments next year. According to a report presented this Thursday by the Economic Commission for Latin America and the Caribbean (ECLAC), the region will continue its “low growth path” by 2024.
The report, Preliminary Balance of the Economies of Latin America and the Caribbean 2023, the last one presented this year by the United Nations organization, estimates that the annual Gross Domestic Product (GDP) will increase by 2.2% by the end of 2023 – a figure higher than the 0.6% by ECLAC in September – but will slow down by 1.9% by 2024.
José Manuel Salazar-Xirinachs, the executive secretary of ECLAC, warns that the poor performance of regional activity will influence “the persistence of high levels of informality, large gender gaps, and other effects on the labor market.”
The perspectives are known at a time when countries face limited spaces for fiscal and monetary policies and an adverse international context, marked by low growth, low dynamics of trade in goods, and a sustained – and possibly permanent – increase in financial costs, said Daniel Titelman, director of the Economic Development division of ECLAC, at a press conference.
The preliminary balance confirms a decline in regional GDP per capita due to a strong contraction derived from the Covid-19 pandemic. Although the indicator has remained stagnant since 2015, the economic crisis has deepened the decline. According to what is forecast in the ECLAC document, in 2023 the GDP per capita will be the same as it was a decade ago.
Despite the panorama, the organization based in Santiago de Chile has clarified that the situation in Latin America is not only due to a “temporary problem”, but is a reflection of the drop experienced in the trend growth rate of the regional GDP. Salazar-Xirinachs affirms that, “unfortunately” the performance of Latin America for this and next year is no longer “mainly attributable to the consequences of the pandemic”, but rather it is a “syndrome” of low growth in the region that is observe over a longer period.
The executive considers that “it is necessary to scale productive development policies with a focus on dynamic strategic sectors”, at the same time as “promote policies to promote public and private investment, and adapt the financing framework to enhance the mobilization of resources” .
Although lower annual growth is expected in all subregions for 2023, the report highlights the heterogeneity among the countries of Latin America and the Caribbean. While a fall in the GDP of Argentina (-2.5%) and Haiti (-1.8%) is expected this year, the rest of the economies will show a moderate increase: Bolivia (2.2%), Brazil (3 %), Chile (0.1%), Colombia (0.9%), Ecuador (1.9%), Paraguay (4.5%), Peru (0.3%), Uruguay (1%), Venezuela (3%) and Mexico (3.6%), among other nations.
In addition, ailing economies are showing a slowdown in their ability to create jobs. It is estimated that the number of employed people will rise to 1.4% this year, a decrease of 4 percentage points compared to the 5.4% registered in 2022.
The lower job creation will continue next year, according to the document presented by ECLAC. And he adds: “The dynamics that the labor markets have shown in the first half of 2023, as well as the estimates for the rest of the year and next, anticipate that wide gender gaps will persist in indicators such as the unemployment rate and participation, although these have been reducing.”