The Economic Commission for Latin America and the Caribbean (ECLAC) lowered its growth projections for 2022 in the region from 2.1%, estimated last January, to 1.8%, due to the impact of the war in Ukraine.
“The economies of Latin America and the Caribbean face a complex situation in 2022 due to the war between Russia and Ukraine“, said in a statement the agency dependent on the UN, based in Santiago de Chile.
According to ECLAC, the economies that will expand the most this year are Panama (6.3%), Dominican Republic (5.3%), Venezuela (5 %), Colombia (4.8%), Guatemala (4.2%), Honduras (4.1%) Uruguay (3.9%), Costa Rica (3.7%) and bolivia (3.5%).
In the middle of the table are Cuba (3.4%), The Savior (3 %), Argentina (3 %), Ecuador (2.7%), Peru (2.5%), Nicaragua (2.5%), Mexico (1.7%) and Chili (1.5%), while the countries that will grow the least will be Paraguay (0.7%), Haiti (0.6%) and Brazil (0.4%).
For the Caribbean islands, ECLAC estimates an expansion of 10.1% and 4.7%, not counting Guyana, which has been experiencing an oil boom for some time.
The agency explained that “the lower expected growth will be accompanied by higher inflation and a slow recovery in employment“and that war”increased volatility and financial costs“.
In March, regional inflation was 7.5% and “many central banks expect inflation to remain high for the remainder of the year“, according to ECLAC.
To curb rising prices, interest rates have been raised in most countries”in a significative way“, reaching, in most cases, levels similar to 2017.
“The withdrawal of the fiscal impulse is expected to accelerate in 2022, in line with the evolution of macroeconomic conditions and the increase in financing costs“, he added.
According to ECLAC, the war has also caused greater volatility in financial markets and has affected capital flows to emerging markets.
“These trends could intensify in the coming months, especially if inflationary pressures persist in developed economies and central banks deepen contractionary monetary policies“, he warned.
Latin America, the region most affected by the covid-19 pandemic, grew by 6.2% in 2021 as a rebound after the 6.8% drop registered in 2020, the largest recession in 120 years.