The Economic Commission for Latin America and the Caribbean (ECLAC) presented its Economic Study 2024 , which paints a panorama where Latin America and the Caribbean will grow only 1.8% in 2024 and 2.3% in 2025, figures that, according to the analysis, project the weak economic recovery, in the midst of an environment marked by low investment, low labor productivity and limited fiscal space.
The report, presented in Santiago, Chile, by the executive secretary of ECLAC, José Manuel Salazar, and the director of the institution’s Economic Development division, Daniel Titelman, highlights that the region has experienced an average annual economic growth of just 0.9% between 2015 and 2024.
“The region is mired in three traps: one of low capacity to grow, one of high inequality and low social mobility, and a third of low institutional capacity and very weak governance,” explained José Manuel Salazar.
According to specialists, this period, which is already considered by some as a “second lost decade” , reflects a stagnation that contrasts with the relative prosperity of the first decade of the 21st century.
By 2024, South America is projected to grow by 1.5%, while Central America and Mexico would grow by 2.2%, and the Caribbean, excluding Guyana, by 2.6 percent.
In this sense, the study explains that low economic growth has had a significant impact on the labor market . Between 2014 and 2023, the average growth in the number of employed people was only 1.3%, much lower than the 3.9% recorded in the 1970s.
Furthermore, labor productivity has shown a notable deterioration , since at the end of 2024 it is estimated that it will be even lower than that recorded in 1980.
For ECLAC, this stagnation has not only limited job creation, but has pushed the majority of new workers towards informality , especially in low productivity sectors such as construction, commerce and services, which currently account for 74.4 % of informally employed people.
ECLAC also warns that, in a scenario where significant investments in adaptation and mitigation are not implemented, the effects of climate change could intensify , resulting in the loss of up to 43 million jobs by 2050, which would represent close to 10% of the workforce of the region.
“The comprehensive approach of a new generation of productive development policies that we are promoting at ECLAC is essential to get out of the low growth trap. We should not be shy about making sectorial bets, especially now, given technological change and the need for sustainability,” said Daniel Titelman, director of the Economic Development Division of ECLAC.
The sectors most vulnerable to these impacts would be agriculture and tourism , with a possible loss of 15 million jobs in these two sectors alone.
What projections are there for Mexico?
In the regional context, the country faces particular challenges. Mexico’s Gross Domestic Product (GDP) grew by 3.2% in 2023, slowing slightly compared to 3.7% in 2022.
Despite this growth, ECLAC estimates that in 2024 the Mexican economy will only grow 1.9% , mainly due to the economic slowdown in the United States, its main trading partner, and an internal slowdown in consumption and investment.
The report highlights that, although inflation in Mexico has decreased to 4.7% at the end of 2023, it is still outside the target range (2 – 4%) of the Bank of Mexico , which has forced the central bank to maintain inflation rates. high interest.
The unemployment rate, for its part, was reduced to 2.8% in 2023, but labor informality remains a significant problem , with a rate of 53.6%, just below the 54.9% in 2022.
Consequently, by 2024, inflation would remain around 4.5% and the fiscal deficit of the non-financial public sector would reach 5.0% of GDP, the highest level since 1990, due to the financing of emblematic infrastructure projects of the current government.
Additionally, the net debt of Mexico’s non-financial public sector increased to 49.5% of GDP at the end of 2023, compared to 47.6% in 2022, largely due to the high cost of debt service, which grew 20.9% during the year, reaching 3.3% of GDP.
Regarding fiscal policy in Mexico , it has been expansive, with an increase in social spending and investment in infrastructure; however, the ECLAC report highlights that this approach has generated a growing public deficit and limited fiscal space. for future economic interventions.
Monetary policy , on the other hand, has been restrictive, with interest rates that, although they have begun to reduce, remain high compared to pre-pandemic levels. This combination of policies poses a challenge for the country’s macroeconomic stability in the short and medium term.
The ECLAC Economic Study 2024 concludes with a call to action, since, to break the trap of low growth, the region needs to implement structural reforms that include productive development policies, a significant increase in public and private investment, as well as effective measures to confront climate change.
This report is one of the most important of ECLAC, since it offers a critical vision of the economic present of Latin America and the Caribbean and proposes a set of key recommendations so that the governments of the region can overcome the current challenges and avoid a third lost decade.
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