Tuesday, September 26, 2023

The OECD forecasts a slowdown in Latin America in 2023 in the face of a more stringent financial scenario

The Organization for Economic Cooperation and Development (OECD) has estimated that the Latin American economies will lose strength during 2023 and 2024 due to tighter national and global financial conditions.

In a new edition of its biannual report ‘Economic Perspective’, the international organization forecasts that Latin American countries will grow between 0.5% and 2.6% in 2023, compared to the 3.8% average progression that these economies will have at end this year.

This economic slowdown is in line with the global trend, since the OECD expects global GDP to fall from 3.1% in 2022 to 2.2% in 2023 and recover again in 2024, reaching a modest 2.7%.

“The main Latin American economies have performed better than expected in 2022, especially among the food and energy segments, which benefited from better terms of trade. Still, this rebound is expected to run out of steam during 2023 and 2024, amid a withdrawal of most of the remaining fiscal support and less buoyant commodity prices.

By country, the Colombian economy is the one that will suffer the greatest deceleration in 2023, going from a growth of 8.1% in 2022 to 1.2% in the next year, according to the data handled by the OECD.

However, Colombia will remain above other countries such as Argentina or Chile, which will grow by only 0.5%, or at the same level as Brazil, which will also grow by 1.2% and whose economy will not be as dynamic this year, closing 2022 with an increase of 2.8%.

For its part, Peru will be the country that suffers the least economic slowdown, going from advancing 2.7% in 2022 to 2.6% in 2023. The second largest economy in Latin America that will grow the most will be that of Costa Rica, around 2.3 %.

Looking ahead to 2024, some countries will still be far from the levels of 2022. This is the case of Argentina, which will go from 4.4% this year to 1.8% in 2024, or Brazil, which will halve its growth, from 2.8% to 1.4%

Meanwhile, others such as Peru or Chile will grow above 2022 levels (2.9% and 2.6%, respectively). At the same time, Mexico will remain 0.4 points behind the growth of 2022.


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