CEPAL Forecasts 2.0% Growth for Mexico, Central America in 2023

The Economic Commission for Latin America and the Caribbean (CEPAL) revised Latin America’s growth forecasts for 2023. The commission warns that uncertainty continues to loom on the horizon for Latin American economies, so all subregions are expected to record lower growth during the year.

CEPAL’s revision forecasts that Latin America will grow 1.2% in 2023, which is a decrease from what was recorded in 2022. Central America and Mexico are expected to grow by 2.0%, a contraction over 2022’s 3.5% growth. Meanwhile, South America is expected to grow by 0.6% in 2023, while it grew 3.8% in 2022.

“The economies of Latin America and the Caribbean face a complex external scenario in 2023, marked by low growth in economic activity and global trade. In addition, the interest rate hikes carried out globally were compounded by the financial turbulence seen in early March, which has increased uncertainty and volatility in financial markets. Although inflationary pressures have slowed, monetary policy rates are expected to remain high throughout 2023 in the main developed economies,” explains CEPAL in a press release.

The entire world continues to suffer from the effects of inflation and Latin America is no exception, warns CEPAL. However, the commission noted that inflation has shown a downward trend and could stop growing following strict interest rate hikes by central banks. Global financial volatility has also proven challenging for countries in the region.

“For the economies of Central America and Mexico, although growth this year represents a deceleration from 2022, in some cases CEPAL has upwardly revised the estimates it made at the end of last year. This is due to the upward revision of growth in the US, which is the main trading partner and top source of remittances for these countries, which would affect both the external sector as well as private consumption,” explains CEPAL. 

Mexico continues growing despite the numerous challenges, reports the National Institute of Statistics and Geography (INEGI). The institute informs that secondary and tertiary activities were a vital impulse for Mexico’s economic growth in March 2023, as INEGI estimates an annual growth for the country, as reported by MBN.