Washington (EFE).- The International Monetary Fund (IMF) warned this Wednesday that the riots and political paralysis that are being experienced in different regions of Latin America could have consequences for the economic activity and growth of the continent.
“The continued possibility of unrest and political paralysis has the potential to erode confidence and weigh on economic activity,” the Fund noted in an article written by analysts Gustavo Adler, Nigel Chalk and Anna Ivanova.
Need for economic stability despite crises
Although it does not mention any of the political crises that have been experienced in recent weeks in countries such as Brazil or Peru, the IMF explains that “the growing social discontent and the decline in confidence in public institutions has been an important trend in the region for some time.”
“Social tensions have certainly been exacerbated during the pandemic. The poorest people, particularly those who work in face-to-face services, were the most affected by the economic consequences. While government support helped, many were unable to completely insulate themselves from the negative impact, as evidenced by the marked increase in poverty,” the article added.
IMF analysts explain that, despite the fact that in 2022 the region’s economy expanded by almost 3.9%, inflation receded and employment recovered strongly, “2023 is likely to be a challenging year for the region ».
This week the agency published its latest global growth forecasts and noted that Latin America and the Caribbean will grow 1.8%, below the global average of 2.9%. Also in 2024, when it will grow 2.1%, compared to the 3.1% world average.
All of this will be due, among other reasons, to the higher interest rates, the fall in the prices of raw materials, the slowdown in job creation, the weakening of consumer confidence and the lower growth of its partners. trade, particularly the United States and the euro zone.
Despite the “obvious difficulties,” policies “must focus on ensuring economic stability, stimulating growth and job creation, supporting entrepreneurship, and addressing the pressing social needs facing many people in the region.”
“This will help mitigate social discontent and restore confidence in public institutions,” the article states.
Inflation, linked to the growth of the Latin American economy
The IMF also mentions that central banks should not reduce their determination to lower inflation and that fiscal policy “should emphasize social spending to support the poor while reducing public debt.”
“Achieving these targets will require revenue mobilization in a progressive, growth-friendly and equitable manner. Trust in the government will continue to be undermined as long as the rich do not pay their fair share in taxes.
The text is accompanied by detailed forecasts for the different countries of the region; Thus, Mexico will grow 1.7% this 2023 and 1.6% next year, while Brazil will grow 1.2% this year and 1.5% in 2024.
For Argentina, growth of 2% is estimated in 2023, a figure similar to that of 2024; Chile, on the other hand, will decrease by 1.5% in 2023 and will grow by 1.9% a year later. Colombia 1.1% and 2.1%; Ecuador 3% and 2.8%; Uruguay 3.6% and 2.7%; Peru 2.5% and 3.2%; Costa Rica 2.9% and 3% and Panama 4% both years.
As for inflation, after registering 7.9% in 2022 (excluding the volatile Argentina and Venezuela), in 2023 the IMF estimates that it will stand at an average of 5.2% in the region and in 2024 at 3 ,4 %.