The Economic Commission for Latin America and the Caribbean (ECLAC) said on Tuesday that slowing trade growth, a stronger dollar and tightening global financial conditions were some of the factors impacting the economic recovery of countries in the region. warned. 2.7% CAGR forecast for the region in 2022.
At the press conference announcing its 2022 Economic Survey held in Santiago, Chile, ECLAC updated its gray growth projections for this year’s sub-regions, stating: South America, 2.6% compared to 6.9% in 2021. The group formed in Central America and Mexico was 2.5%, compared with 5.7% the previous year.and the Caribbean – The only sub-region to grow above 2021 – 4.7% excluding Guyana (compared to 4.0% last year).
ECLAC revealed that these projections are averages that mask the reality of many countries, recalling the high heterogeneity of countries within the region.
“Sixteen countries in the region, or almost half, will not have recovered their pre-pandemic GDP levels this year.” ECLAC’s Director of Economic Development, Daniel Titelman, emphasized:
Titelman also noted that declining economic activity has slowed recovery in the labor market, especially for women, The unemployment rate is expected to reach 11.6% this year, up from 9.5% in 2021..
Crisis exacerbated by war in Ukraine
The ECLAC report addresses geopolitical tensions, declining global economic growth, Declining food availability and rising energy prices As a result, inflation caused by the impact of the COVID-19 pandemic accelerated.
The commission’s interim secretary-general said the situation was exacerbated by declining investment and rising social demand, posing major challenges to macroeconomic policy. Measures to boost economic recovery must be coordinated with policies aimed at curbing inflation Make finances sustainable.
“This cumulative event will force us to rethink the economics.” Mario Chimori added that macroeconomic policy adjustments are needed to help accelerate growth, investment, poverty reduction and inequality while also tackling inflation dynamics.
inflation, Reached the regional average of 8.4%, led the central bank to raise interest rates and reduce the total amount of money to control it. But Chimori warned that monetary policy alone could lead to recession.
underinvestment
In this regard, the report goes beyond economic cycle dynamics to Low investment growth over the past 30 years is a structural constraint on developmentwhich is why it is so important to reinvigorate investment dynamics for sustainable and inclusive growth.
“Investment is a bridge between the short and medium term, Essential for coping with climate change. “ the text says.
According to the study, between 1951 and 1979, investment increased by an average of 5.9% per year. Between 1990 and 2021, this figure reached just 2.9% per year.
In this context, ECLAC has urged increased investment in Latin America and the Caribbean, highlighting the lowest levels in 2021 compared to other regions.
this is, Greater coordination is needed between fiscal, monetary and exchange rate policies and the use of the suite of tools available to authorities Don’t subordinate growth and investment to anti-inflationary policies.
In addition, macroeconomic efforts should be complemented by industry, trade, social and care economy policies,add.
ECLAC believes that most of the funding for increased investment must come from domestic mobilization, but that international cooperation is very important in the process. “This requires a significant increase in official development assistance and loans from international financial institutions and development banks.” it says.
“If investment does not rise, employment will not rise, and informality and inequality does not decrease. We need investments that create quality jobs. If investment does not increase, all measures taken will be accommodative,” Cimoli warned.