The most recent estimations by the Economic Commission for Latin America and the Caribbean (ECLAC) (CEPAL) determined that for this year, Mexico will experience a growth of 2.5% in its Gross Domestic Product (GDP), a assessment that has remained since December 2023 when the Commission adjusted the country’s economic development upwards.
The organization revealed that this year, there will be a slight increase in the growth projection for the economies of the region, averaging 2.1 percent.
The region showing the most dynamism will be the Caribbean (excluding Guyana) with an average advancement of 2.8%, followed by Central America and Mexico at 2.7%, while South America will grow by 1.6 percent.
According to the updated projections, the country with the highest economic growth will be Guyana with 34.3%, while the economy with the highest downward trend will be Argentina with a contraction of 3.1%.
“The expected expansion for the region in 2024 remains on the path of low economic growth observed in recent years, and the major challenge is how to move towards higher, dynamic, and inclusive growth,” stated ECLAC.
The region faces a complex international scenario, mainly due to the low growth of economic activity and global trade below historical averages. This is compounded by high interest rates in developed countries, resulting in higher financing costs for emerging countries, including the Latin America and the Caribbean region.
“On the domestic front, the downward trend in inflation has provided room for central banks in several countries to implement decreases in their policy interest rates, from which a favorable impact on economic activity could be expected,” detailed ECLAC.
The Commission indicated that this year global markets will be marked by several risk factors. Starting with the growing geopolitical tensions that are pushing the world towards a reconfiguration of value chains.
“Additionally, there is the risk that increases in commodity prices may delay policy interest rate cuts by major central banks, with negative effects on global economic growth. Along with the above, if interest rates remain high for longer, vulnerabilities could increase further due to debt burdens in several emerging and developing economies, as well as the vulnerability of the financial sector in developed countries,” noted ECLAC.
The United Nations agency communicated that Latin America and the Caribbean are in a development crisis characterized by three mutually reinforcing traps: a low-growth trap, a high-inequality and low social mobility trap, and a low institutional capacity and ineffective governance trap. It explained that this conditions and limits the achievement of the United Nations 2030 Agenda and, therefore, the achievement of inclusive social development.
It specified that to stimulate growth, countries in the region need to increase their productivity and allocate greater resources for the development of physical and human capital. However, it emphasized that resources should be directed towards the adoption of new technologies, as well as “promoting cluster initiatives and good business practices, fostering deep improvements in the capital accumulation process, and properly leveraging the social and environmental capital of economies.”
ECLAC determined that it is necessary for the region to invest in critical areas to increase productivity, such as infrastructure, telecommunications, digitalization, research and development. As well as significant improvements in health programs, “and an adaptation of educational systems to respond to the changes that digitalization and automation entail for labor markets,” it assured.
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