CEPAL Downgrades Latin America’s Growth Expectations for 2023

The Economic Commission for Latin America and the Caribbean (CEPAL) increased its growth expectations for 2022, but highlighted that the region will suffer a steep slowdown in 2023. 

CEPAL’s growth projections indicate that Mexico’s GDP will grow by 1.9 percent in 2022 and by 1.3 percent in 2023. The organization also forecasted a 3.2 percent growth in Latin America and the Caribbean’s GDP during 2022, an increase from its previous estimate made in August 2022. During 2023, the organism expects a 1.4 percent growth in the region’s GDP, attributed to the economic deceleration and international restrictions. 

“The war between Russia and Ukraine negatively affected global growth, and with it the external demand that the region faced this year, along with accentuating inflationary pressures, volatility and financial costs. The greater aversion to risk, together with the more restrictive monetary policy by the main central banks of the world, harmed capital flows to emerging markets, including Latin America, in addition to propitiating depreciation of local currencies and making it more onerous to obtaining financing for the countries of the region,” reads CEPAL’s press release. 

Latin American countries will face a deceleration in commercial trade, a slowdown in economic growth, higher interest rates, less global liquidity, strict monetary and fiscal policies and an increase in inflation. 

CEPAL modified its projections for the region, arguing that South America will grow by 1.2 percent in 2023 and by 3.4 percent in 2022, Central America and Mexico will grow by 1.7 percent and by 2.5 percent in 2022 and the Caribbean will grow by 3.1 percent and by 4.3 percent in 2022.

“For the economies of Central America and Mexico, the low dynamism of the US, the main trading partner and main source of remittances for their countries, would affect both the external sector and private consumption. In this case, however, the lower prices of basic goods would work in their favor, since several of them are net importers of food and energy,” wrote CEPAL.