The Economic Commission for Latin America and the Caribbean (ECLAC) forecasts 2.7% economic growth as a regional average for 2022, in the context of strong macroeconomic constraints pressing on all economies.
The less dynamic increase in GDP compared to expectations, as well as the decline in world trade, the appreciation of the dollar and the tightening of global financial conditions are negatively affecting the countries of Latin America.
All this is reflected in particular in the decrease in capital flow (investment) with a decrease of 13%, with the decrease in the value of exports / imports and the sending of remittances, referred to in the report “Economic Study of Latin America and the Caribbean 2022: Investment Dynamics and Challenges to Promote a Sustainable Economic Recovery” and comprehensive.”
In it, the Economic Commission for Latin America and the Caribbean announced that although it revised its growth estimates upward by about one point in relation to the 1.8% forecast last April, the scenario for the region remains “extremely complex”.
According to the report, in addition to strong inflationary pressures, low dynamism of job creation, low investment and growing social demands, there is a global scenario characterized by the war between Russia and Ukraine, which has caused increased geopolitical tensions. .
Likewise, the world is experiencing lower global economic growth, lower food availability, and increases in energy prices, the study details. Mario Simoli, interim executive secretary of the Economic Commission for Latin America and the Caribbean, stated that “16 out of 33 countries in the region have not recovered to the levels of GDP they had before the epidemic,” so the group made up of Central America and Mexico is expected to grow By 2.5%, compared to 5.7% in 2021.
In this region, Panama is expected at 7%, followed by Guatemala at 4% and Honduras at 3.8%. Costa Rica can grow 3.3%, Nicaragua 3%, El Salvador 2.5 and Mexico 1.9%.
Sergio Recinos, President of Bank of Guatemala (BGU), told Prensa Libre that after 8% growth in 2021, the range is expected to range from 3% to 5% for 2022, so the average figure coincides with the indicated forecasts.
Less resource flows
As of the third quarter of 2021, the region, for the first time in two years, resumed its position as a net cash-flow receiver (not including net direct investment). However, as of the first quarter of 2022, the cumulative annual total shows a 13% decrease compared to the previous four quarters.
Other indicators slowing its growth are the value of exports and imports and family remittances.
The value of exports is expected to increase in 2022 by 22%, down from 28% recorded in 2021, and imports by 23%, down from 37% last year.
After remittances increased by 27% in 2021, a volume not seen in the previous 10 years, growth is expected to continue by 2022, but in a more moderate way. According to the study, in the first months of the year, the growth rate of remittances was lower than the rate recorded in 2021, for all countries observed.
growth
According to Daniel Tettleman, director of the agency’s Department of Economic Development, the projected increase is only due to “adjustments in consumption behaviour” and the region is heading “into the low growth trajectory it was showing prior to the onset of the pandemic.”
Latin America, with a population of 626 million and considered the most unequal in the world, faced the pandemic at a time of weakness in its economy, with a growth rate of barely 0.1% in 2019. After a crash of -6.8% in 2020., the region has grown as ” rebound” by 6.2% last year.
In the case of Guatemala, President Pangat stressed that although moderation in economic growth is expected for 2022, all activities are expected to register positive growth. He stressed that “economic growth is supported by domestic demand, trade links with the United States, and prudent economic policies.”
Challenges
Among its conclusions, ECLAC notes that in order to meet the economic scenario, macroeconomic policy must increase sustainable growth, strive for price stability, create good jobs, and reduce poverty and inequality.
In addition, he urged the promotion of public and private investment so that it is not subject to anti-inflation policies. Financial incentives, with an appropriate design and governance framework, allow for the mobilization of private investment towards strategic sectors. He adds that national public investment regimes (SNIP) are important to enhance the coherence, efficiency and effectiveness of public investment.”
“In the context of multiple objectives and increasing constraints, coordination of macroeconomic policies is required to support acceleration of growth and investment and the reduction of poverty and inequality, while countering inflationary dynamics,” Simoli declared.
In a statement recently published on its website, after a group of investors attended, the National Competitiveness Program (Pronacom) indicated that this entity is continuing its work to promote the country as an investment destination.
The strategy of attracting investment continues to be a major focus of the strategic plan of the Ministry of Economy, as part of achieving the axis of economy, competitiveness and prosperity in general government policy, which has so far confirmed more than 900 million US dollars. of investment for the country,” the publication reads.
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