Latin America and the Caribbean are expected to experience greater economic growth in 2023 than predicted by the International Monetary Fund.
In its World Economic Outlook report, the International Monetary Fund (IMF) estimates GDP growth for the region at 1.9% in 2023, up 0.3 percentage points from the 1.6% forecast in the April edition of the report.
The IMF’s economists also expect regional GDP to grow by 2.2% in 2024, a figure that has not changed since the last report in April.
“The improvement in the regional forecast for 2023 is mostly driven by positive news from Brazil and Mexico, which are now expected to grow by 2.1% and 2.6%, respectively, in 2023,” IMF economists stated.
The upward revision to 2023 reflects stronger-than-expected growth in Brazil, up 1.2 percentage points to 2.1% since the April WEO, due to the increase in agricultural production in the first quarter of 2023, with positive implications for activity in services. It also reflects stronger growth in Mexico, revised up 0.8 percentage points to 2.6%, with a delayed recovery in services after the pandemic and spillover effects of resilient US demand.
Despite the fact that Colombia was not included in the IMF’s mid-year review, the IMF predicted in April that the country’s economy would increase by 1.0% in 2023 and 1.9% in 2024.
These numbers represent a marked downgrade from the sharp growth of 11.0% and 7.5% that the Andean nation experienced in 2021 and 2022, respectively, but those years reflected a significant rebound from the COVID slump while also beating the latest forecasts for both Argentina and Chile.
The International Monetary Fund expects global growth to end at 3.0% this year and 3.0% in 2024 and attributes a range of factors to the improvement in the outlook, including the resolution of the US debt ceiling crisis, the easing of the banking crisis that emerged in March, and the continued decline in inflation in the whole world.
The International Monetary Fund also expects the United States to avoid the much-discussed possibility of a recession this year, with 2023 GDP growth projected at 1.8%. However, this will drop to just 1.0% in 2024, highlighting the ongoing challenges facing all countries.
Despite a comprehensive upward revision of the global outlook, the IMF was quick to note that even the revised global growth figures are below the 3.5% growth rate for 2022 and still represent a lackluster performance in a broad sense.
The IMF also listed a range of risks that remain for the global economy, any of which could lead to lower-than-expected growth this year and in the longer term.
