The Organization for Economic Cooperation and Development (OECD) sees signs of “slight improvement” in the economic growth of the main open economies of Latin America, but in any case it will be “insufficient” to significantly raise the standard of living of its populations.
On the occasion of its semiannual Outlook report published this Wednesday, which it announced in the first days of December 2024, the OECD publishes a chapter dedicated to Latin America in which it highlights that with its potential growth so low, the region will not converge with the most advanced countries in Gross Domestic Product (GDP) per capita.
(See: OECD highlights the resilience of the global economy, but fears trade tensions).
On the whole, In the seven countries analyzed in this chapter (Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico and Peru) the GDP will rise on average by 1.7%, the same as the one known as the ‘developed world club’, which is the OECD, and much lower than the global economy (3.2%).
The figure will be somewhat higher in both 2025 (2.2%) and 2026 (2.1%) and the main reason will be that Argentina is finally going to emerge from the deep recession it has been going through, since after the 3.8% decline expected in 2024, it will recover 3.6% next year and 3.8% % next.
A positive element in the region is thatInflation is moderating in most of these countries, which has allowed a drop in interest rates, although in Brazil the rise in prices has led the central bank to raise them recently.
(See: OECD forecasts for Colombia: the country’s GDP would be 1.8% in 2024 and 2.7% in 2025).
GDP.
But at the same time, there are a series of risks, starting with the external ones derived from geopolitical and trade tensions, particularly given the possible increase in tariffs by the United States, with which Donald Trump has once threatened profusely. to return to power on January 20.
At the domestic level, The risks they face derive mainly from the high deficit in public accounts and the growing level of debt with its interest burden, which has worsened in almost all countries.
(See: New doubts about Colombia: the fiscal and economic alerts that were launched).
The OECD points out that most of them are currently lagging behind the fiscal goals that had been set for 2024, Therefore, it is considered “urgent” to take adjustment measures.
From a broader perspective, the great challenge for the region continues to be increasing long-term growth, which requires strengthening investment and accelerating productivity with improvements in the business environment and greater competition.
Regarding this last aspect, the authors of the report recall that Latin America, if compared to the OECD average, is lagging behind and must reduce regulatory barriers in key sectors such as network industries (electricity, transportation, telecommunications) and services in a way that attracts more investments.
Other priority reforms must be to reduce the administrative burden and entry costs for companies and For this, one step is to simplify the incorporation of companies through the so-called single windows from which to carry out all the procedures online and in one go.
The OECD also emphasizes that the large renewable energy resources that Latin America offers and its favorable position to host local outsourcing activity, particularly from USA, They offer you “unique opportunities.”
(See: How is Colombia’s GDP compared to other countries so far in 2024).
He also believes that investments in sustainable infrastructure and industries greens could”turn the region into a sustainability leader“, but on condition of acting “now”.
EFE
