TheEconomic Commission for Latin America and the Caribbean (ECLAC) foresees a panorama of uncertainty in the economic sphere in Latin America and the Caribbean, in light of which it projected that the region will maintain low growth with an expansion of just 2.2% this year and 2.4% in 2025 , according to the Preliminary Overview of the Economies of Latin America and the Caribbean 2024 .
“This year and next year, the economies of the region will remain mired in a low-growth-capacity trap, with growth rates that will remain low and with a growth dynamic that depends on private consumption, and less on investment,” the organization stressed in the report, which was released on Wednesday.
The analysis indicated that the economy in the region will only achieve an average annual growth of 1% in the period 2015-2024, which implies a stagnation of the Gross Domestic Product (GDP) per capita during that period.
He explained that in 2025 South America would grow by 2.6% ; Central America by 2.9% ; while in the Caribbean, excluding Guyana, it would grow by 2.6 percent . In this context, the low rate of job creation , high informality and significant gender gaps in the region’s labor markets persist .
In line with low GDP growth, employment in the region also registered a limited increase of 1.7% in 2024, the lowest recorded in the post-COVID-19 pandemic.
“Confronting the low growth capacity trap requires, on the one hand, increasing the capacity of economies to mobilize financial resources effectively, in order to strengthen resilience to economic fluctuations and, on the other, strengthening productive capacity in the medium and long term,” said José Manuel Salazar-Xirinachs , Executive Secretary of ECLAC.
Regarding informal employment, the average informal employment rate in the region is expected to stand at 46.7% , which would mean a decrease of 0.4 percentage points compared to the rate recorded in 2023.
On the other hand, after peaking in 2022, inflation in the economies of Latin America and the Caribbean has been declining . From 8.2% that year, the regional median inflation fell to 3.7% in December 2023. In addition, inflation is estimated to continue to decline in 2024, reaching 3.4 percent .
According to the Preliminary Balance 2024, among the main policies to address the low capacity for growth is the mobilization of financial resources. Domestically, strengthening public finances is required . This implies concentrating efforts on increasing tax collection and increasing its progressivity, in addition to reducing the levels of evasion in this area.
Given this scenario, ECLAC proposed strengthening the governance and technical, operational, political and prospective capacities (TOPP capacities) of macroeconomic institutions. In the area of productive development policies (PDP), the organization emphasized the need to implement “new generation” policies to promote productive transformation.
He also suggested the need to identify areas with high potential to boost growth , prioritizing environmental sustainability, the promotion of science, technology and innovation, digitalization, among other factors, as well as taking advantage of global value chains to diversify economies.
In this regard, ECLAC identified 14 driving or transforming sectors grouped into three categories: industry , services and key areas for sustainability, which are priorities for the countries of Latin America and the Caribbean, since they have a high potential to boost growth and productivity.
According to the Bank of Mexico (Banxico) , the annual general inflation in the country will close at 4.36% , slightly down from the 4.42% projected in November. Meanwhile, Mexico’s GDP would close 2024 with a growth of 1.55% , although specialists warned that for the following year growth would slow down, with an estimate of 1.17 percent .
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