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Latin America 2023: The Macro Outlook
BY JOACHIM BAMRUD
After growing 3.6% or more last year, the economy of Latin America and the Caribbean is projected to only expand by 1.3% this year, according to the most recent data from The World Bank and the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).
“The slowdown reflects efforts by monetary authorities to tame inflation, and spillovers from a weak global outlook,” The World Bank says. “Sluggish growth in the United States and China is expected to curtail export demand, while rising U.S. interest rates are likely to keep financial conditions restrictive. Slow global growth is expected to weigh on commodity prices, weakening South America’s terms of trade.”
Meanwhile, inflation will remain a serious problem. The International Monetary Fund (IMF) estimates it will reach 11.4% this year, following last year’s rate of 14.1%, the highest in 26 years.
Here is a country-by-country overview.
ARGENTINA
Argentina is expected to see growth between 1% (ECLAC) and 2% (The World Bank), following an estimated 5.2% last year (The World Bank).
The country will likely see inflation of 76% this year, the IMF estimates, after a 95% rate last year, the
highest in three decades.BOLIVIA
Bolivia is expected to see growth between 2.9% (ECLAC) and 3.1% (The World Bank), following an estimated 3.3% last year (The World Bank).
The country will likely see inflation of 3.6% this year, the IMF estimates, after an estimated 3.2% last year.
BRAZIL
Brazil is expected to see growth between 0.8% (The World Bank) and 0.9% (ECLAC), following an estimated 3% last year (The World Bank).
The World Bank blames high interest rates that curb investment and export growth slowing down.
The country will likely see inflation of 4.7% this year, the IMF estimates, after a rate of 5.8% last year, according to statistics agency
IBGE.CHILE
Chile is expected to see a decline between 1.1% (ECLAC) and 0.9% (The World Bank), following an estimated 2% last year (The World Bank).
“Chile’s economy is likely to contract over the year, as lower real incomes erode consumption,” The World Bank says.
The country will likely see inflation of 8.7% this year, the IMF estimates, after ending last year at 12.8% last year, the highest in more than three decades, according to government statistics agency
INE.COLOMBIA
Colombia is expected to see growth between 1.3% (The World Bank) and 1.5% (ECLAC), following an estimated 8% last year (The World Bank).
The country will likely see inflation of 7.1% this year, the IMF estimates, after ending at 13.1% last year, the highest in 23 years, according to statistics agency
DANE.COSTA RICA
Costa Rica is expected to see growth between 2.6% (ECLAC) and 2.9% (The World Bank), following an estimated 4.1% last year (The World Bank).
The country will likely see inflation of 6.4% this year, the IMF estimates, after an estimated 8.9% last year.
DOMINICAN REPUBLIC
The Dominican Republic is expected to see growth between 4.6% (ECLAC) and 4.8% (The World Bank), following an estimated 5.3% last year (The World Bank).
The country will likely see inflation of 5.7% this year, the IMF estimates, after an ending at 7.8% last year, according to the Central Bank.
ECUADOR
Ecuador is expected to see growth between 2% (ECLAC) and 3.1% (The World Bank), following an estimated 2.7% last year (The World Bank).
The country will likely see inflation of 2.4% this year, the IMF estimates, after an estimated 3.2% last year.
EL SALVADOR
El Salvador is expected to see growth between 1.6% (ECLAC) and 2% (The World Bank), following an estimated 2.4% last year (The World Bank).
The country will likely see inflation of 2.7% this year, the IMF estimates, after an estimated 7.3% last year.
GUATEMALA
Guatemala is expected to see growth between 3.1% (The World Bank) and 3.2% (ECLAC), following an estimated 3.4% last year (The World Bank).
The country will likely see inflation of 5.6% this year, the IMF estimates, after an estimated 6.4% last year.
GUYANA
Guyana is expected to see growth between 25.2% (The World Bank) and 30% (ECLAC), following an estimated 57.8% last year (The World Bank).
The country will likely see inflation of 7.6% this year, the same as last year, according to IMF estimates.
HONDURAS
Honduras is expected to see growth between 2.7% (ECLAC) and 3.1% (The World Bank), following an estimated 3.5% last year (The World Bank).
The country will likely see inflation of 8.5% this year, the IMF estimates, after an estimated 8.6% last year.
MEXICO
Mexico is expected to see growth between 0.9% (The World Bank) and 1.1% (ECLAC), following around 3% last year, according to Mexican finance minister Rogelio Ramirez de la O.
“Restrictive monetary conditions, stubbornly high inflation, and softer exports curtail activity,” The World Bank says.
The country will likely see inflation of 6.3% this year, the IMF estimates, after an estimated 8% last year.
NICARAGUA
Nicaragua is expected to see growth between 2% (The World Bank) and 2.1% (ECLAC), following an estimated 4.1% last year (The World Bank).
The country will likely see inflation of 7% this year, the IMF estimates, after an estimated 9.9% last year.
PANAMA
Panama is expected to see growth between 4.2% (ECLAC) and 4.5% (The World Bank), following an estimated 7.2% last year (The World Bank).
The country will likely see inflation of 3.3% this year, the IMF estimates, after an estimated 3.9% last year.
PARAGUAY
Paraguay is expected to see growth between4% (ECLAC) and 5.2% (The World Bank), following an estimated 0.3% decline last year (The World Bank).
The country will likely see inflation of 4.5% this year, the IMF estimates, after an estimated 9.5% last year.
PERU
Peru is expected to see growth between 2.2% (ECLAC) and 2.6% (The World Bank), following an estimated 2.7% last year (The World Bank).
“In Peru, elevated policy uncertainty and declining metal prices are expected to dampen growth,” The World Bank says.
Peru has had six presidents from 2006 to today, instead of the three it should have had if each finished a five-year term normally.
The country will likely see inflation of 4.4% this year, the IMF estimates, after an estimated 7.5% last year.
URUGUAY
Uruguay is expected to see growth between 2.7% (The World Bank) and 2.9% (ECLAC), following an estimated 5% last year (The World Bank).
The country will likely see inflation of 7.8% this year, the IMF estimates, after an estimated 9.1% last year.
VENEZUELA
Venezuela is expected to see growth of 5% (ECLAC), following an estimated 12% last year (ECLAC).
The country will likely see inflation of 195% this year, the IMF estimates, after an estimated 210% last year.
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