The Economic Commission for Latin America and the Caribbean (ECLAC) reported yesterday that by 2023 the economy of Dominican Republic will grow 4.6%meaning a slight 4.7% decrease that he had projected last October.
In addition, he points out that in the group of Central American countries, Mexico and the Dominican Republic, a slight reduction of fiscal deficits during 2022, although these would continue to be higher than those registered before the pandemic.
This result is mainly due to the dynamics of the public spendingwhich would remain relatively stablereflecting in part the magnitude of disbursements earmarked for energy subsidies among the countries in this group”, he indicates.
However, it adds that “these forecasts may vary depending on the execution of the public investment projects and capital transfers, which are usually the main adjustment variable in the last months of the year, especially in Central America, Mexico and the Dominican Republic”.
“The reduction in inflation will tend to moderate the increases in the monetary policy rates”
Improves regional projection
The ECLAC also improved to 3.7% his projection of regional growth by 2022, but warned that the next year stage will deteriorate and the expansion will be 1.3%.
In October, the ECLAC had forecast growth of 3.2% for the region in this past year.
In a report released yesterday, entitled “Preliminary balance of the economies of Latin America and the Caribbean”, the organization based in Santiago de Chile points out that, “after the dynamism shown in the first half of 2022, the economic activity region of has slowed down”.
The report indicates that the lower dynamism of economic activity reflects “the depletion of the rebound effect in the 2021 recovery” and “the effects of the restrictive monetary policiesgreater limitations on fiscal spending, lower levels of consumption and investment and the deterioration of the external context”.
Many central banks appeal to interest rate hikes to try to contain the inflationmaking credit for consumption and investment more expensive and thus reducing pressure on prices.
Reduction of inflation will moderate rates
While the inflation in 2022 it will be of 7.3% in the regionnext year there should be a moderation of price increases to 4.8%a level anyway high, indicates the ECLAC.
“The reduction of inflation will tend to moderate increases of rates monetary politics”, points out the agency, which warns in any case of the risk of depreciation of local currencies, “which could affect the trajectory of the inflation”.
RD among growth leaders
In 2023, Paraguay, with an expansion of 4%, Venezuela with 5%, and Dominican Republic, with 4.6%will lead regional growth, projects the ECLAC.
Chile, with a fall of 1.1% along with Haiti with a contraction of the gross domestic product (GDP) of 0.7%are the only two countries in negative.
Brazilthe main regional economy, will grow 0.9% in 2023 after 2.9% in 2022.
In Colombia there will be a sudden stop, which will take the economy from an expansion of 8% in 2022 to barely 1.5% in 2023.
Mexico will grow 1.1%, Argentina 1%, Peru 2.2% and Uruguay 2.9%. Bolivia will grow 2.9% and Ecuador 2%.
Avoid another “lost decade”
The report also highlights that the recovery process of the labor markets in the region “has not made it possible to eliminate the traditional gaps between men and women” and that during 2022 “both an increase in informality and a fall in real wages have been observed”.
levels of indebtednessIn addition, they continue to be high, “so it can be expected that the fiscal space continue to condition the trajectory of the public spending”.
To avoid a new lost decade as observed during the period 2014-2023, the ECLAC calls for “innovative public policies in the productive, financial, commercial, social and in the care economy”.
