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IMF ups forecasts for Latin America as commodity prices surge

The International Monetary Fund (IMF) on Tuesday adjusted 2022 GDP growth forecasts for Latin America upwards on the back of strong commodity prices. The fund, however, expects both growth and inflation to slow in 2023, according to its latest World Economic Outlook report.

Real GDP growth is projected to reach 3.5 percent in 2022 for the region, 0.5 percentage points higher than previously expected. That figure will be cut by half next year, reaching just 1.7 percent in 2023 amid tightening financial conditions and a slowdown in “partner country growth.”

Brazil, Argentina, Colombia, and Chile are all on track to see significantly weaker growth figures next year.

After ending 2022 with a 2.8-percent jump in real GDP, Brazil will only post 1 percent growth next year, while Argentina’s growth will slow from 4 percent this year to 2 percent in 2023. But unlike its southern neighbor, Brazil is likely to see a significant drop in inflation, down from 9.4 percent this year to 4.7 percent in 2023.

Chile could enter into recession territory in 2023 at a negative 1-percent growth rate, while Colombia’s 7.6-percent jump in 2022 will slow to a more modest 2.2-percent increase the year after. Peru will remain more steady, posting 2.7 and 2.6-percent forecasts.

Venezuela will continue to stand out, reaching the best growth numbers in South America this year and the next, at 6 and 6.5 percent, respectively. Inflation is forecast to slow, while still remaining in the triple digits, ending 2022 and 2023 around 200 percent.

Further up north, Mexico will see real GDP grow by 2.1 percent this year and 1.2 percent the next, while Central America as a whole should grow by 3.6 percent and the Caribbean by 7.3 percent next year.

The IMF was more optimistic about inflation in the region, which it expects to fall from an average of 14.1 percent this year to 11.4 percent in 2023.

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