International institutions and global rating agencies have mentioned that the overall economies of Latin American countries are facing economic pressures, where some countries still suffer from structural problems and financial and inflationary challenges that increase the risk of economic slowdown. Meanwhile, some institutions suggest that tighter monetary policies in advanced countries are likely to undermine demand, which will naturally have an impact on the continent’s countries.
According to the United Nations report on the global economic situation and its prospects for 2024, it is expected that the economy of Latin America and the Caribbean will slow down from 2.2 percent in 2023 to 1.6 percent in 2024 due to tightened financial conditions and declining exports.
According to the report, it was mentioned that the future prospects for Latin America and the Caribbean region remain challenging as the expected growth of the Gross Domestic Product (GDP) is projected to slow down in 2024.
The report highlighted that despite the decline in inflation, it is still high, and the structural and overall economic policy challenges still persist.
He stated that stricter financial conditions will lead to undermining of domestic demand, and the slowdown in growth in China and the United States will restrict exports.
According to a recent report by the World Bank, it is expected that the growth rate in Latin America and the Caribbean will increase slightly to 2.3 percent in 2024 and 2.5 percent in 2025.
The report indicated that the global economy is experiencing low growth rates by the end of 2024, which are the lowest and slowest in a period of 30 years.
It is reported that expectations vary for each country. In the case of Brazil, it is expected that the growth will slow down to 1.5 percent in 2024, but it is expected to recover to 2.2 percent in 2025, supported by a decrease in inflation and a decline in interest rates.
At the same time, it is expected that growth in Mexico will decline to 2.6 percent in 2024 and 2.1 percent in 2025, due to weakened external demand.
On the other hand, the economy of Argentina is also expected to recover, expanding by 2.7 percent in 2024 and 3.2 percent in 2025.
The expected growth trajectory in Colombia is projected to increase from 1.2 percent in 2023 to 1.8 percent in 2024 and 3 percent in 2025. It is anticipated that growth in Chile will reach 1.8 percent in 2024 and accelerate to 2.3 percent in 2025.
According to the report, Peru is expected to recover from the contraction in 2023, growing by 2.5 percent in 2024 and 2.3 percent in 2025, supported by an increase in mining production.
According to a recent report by credit rating agency Fitch, the overall expectations for the comprehensive sectors of Latin America’s economies for 2024 are neutral.
She pointed out that countries in the region are experiencing varying growth expectations as they enter 2024, with some experiencing slowdowns and others experiencing modest recoveries. This translates into a modest overall slowdown in the region compared to 2023.
She said, “The external environment will be more challenging, particularly for countries such as Argentina, Bolivia, Ecuador, and El Salvador, as these countries have low sovereign ratings, lack foreign reserves, and have a low exchange rate flexibility and limited access to global markets.”
It is expected that regional growth will decline to 1.6 percent in 2024 from 2.3 percent in 2023, due to slower growth in Brazil and Mexico, and another year of slowdown in Colombia and recession in Argentina. However, this will be balanced by modest recovery in Chile and Peru after the slowdown in 2023.
The credit rating agency, S&P, has identified 10 key factors that will shape the business environment in Latin America in 2024. These include slow economic growth, low inflation, which allows for a potential easing of monetary policy, despite varying inflation trajectories among countries. The agency also emphasizes the importance of maintaining financial discipline overall.
