IMF predicts slight economic slowdown in Latin America for 2024

The economies of Latin America and the Caribbean will end 2024 with a slight slowdown and will rebound again in 2025, although at a rate that is quite different from that of the years immediately following the COVID-19 pandemic, the International Monetary Fund said on Friday.

The region will see growth of 2.1% in 2024, down from 2.2% in 2023, and half the 4.2% in 2022. With 2.5% expected for 2025, GDP activity It will be almost three times smaller than that of 7.4% in 2021.

Excluding Argentina and Venezuela, Latin America and the Caribbean maintained the same level of economic activity this year as in 2023, 2.6%. By 2025 it is projected to be 2.2%.

The projected growth rates for the region are the lowest in the world and were revealed as global external conditions have remained almost unchanged since 2023, despite an expected slowdown. The global economy expanded 3.3% in 2023 and will grow at a similar rate in 2024 and 2025, the IMF said.

In its economic outlook report for the Western Hemisphere released Friday, the IMF said most Latin American and Caribbean countries have successfully weathered a series of shocks and are back on the path to tepid economic growth.

The expectation for inflation, meanwhile, is that it will continue to decline gradually until it reaches the central banks’ goals in most cases in 2026. At the end of 2024 it will approach 13.2% and will recede to about half , 6.9%, next year. In 2023 it rose to 17.2%.

In its report, the IMF said that growth is expected to remain at its low historical average in the medium term, reflecting challenges that have not been resolved, such as the low level of investment and productivity growth.

The financial body indicated that it is “worrying” that the current reform agenda is narrow and could lead to a vicious cycle of low growth, social unrest and populist policies.

“To avoid this, policies are required that strengthen all the drivers of growth,” said the IMF and mentioned strengthening the rule of law, improving government effectiveness and curbing crime as priorities.

Argentina and Haiti are the only countries in the region in which GDP has had negative growth in 2024, of -3.5% and -4%, respectively. By 2025, activity is expected to rebound to 5% in the South American nation and 1% in the Caribbean, according to the perspectives of the Washington-based organization.

The two countries with the highest inflation, meanwhile, are Argentina (140%) and Venezuela (60%). Next year it is expected to fall to 45% in Argentina and remain unchanged in Venezuela.

With 43.8% growth, Guyana, an oil-rich nation, leads the expansion chart for this year. In the Dominican Republic it is expected to be 5.4%, and in Costa Rica and Panama 4%.

Brazil will have growth of 3.5% this year and 2.2% next year; Mexico of 1.5% in 2024 and 1.3% in 2025 and Colombia of 1.6% and 2.2%, respectively. Chile will rebound this year to 2.5% and will fall slightly next year to 2.4%.

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