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LATIN AMERICA ADVISOR

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

September 13, 2022

What Forces Are Driving the Region’s Economic Growth?

The Caribbean will experience 4.7 percent growth this year, higher than Latin America and the Caribbean as a whole, according to ECLAC. Santo Domingo is pictured. // File Photo: Government of the Dominican Republic.

Q

  • The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) released a report last month forecasting that Latin America and the Caribbean will “resume the path of low growth seen prior to the Covid-19 pandemic,” expanding 2.7 percent on average this year. The deceleration in economic activity, which is half the rate of growth the region posted last year, is constraining the labor market recovery, especially for women, according to ECLAC. What factors are driving economic growth in Latin America and the Caribbean this year and next, and which subregions and countries are positioned to do better than others? What tools can policymakers use both to spur job growth as well as tackle inflation? How can vulnerable populations that are being left behind in the increasingly sluggish recovery most effectively be helped?

A

Alberto M. Ramos, managing director and head of Latin America economic research at Goldman Sachs in New York: “Across Latin America, real activity during the first half of this year benefited from the from ‘post-Covid’ economic normalization, particularly among the labor-intensive services sectors, additional fiscal stimulus in several places, terms of trade gains driven by rising commodity prices and gradually firming labor markets. We expect activity to decelerate visibly toward the end of 2022 and anticipate significant headwinds to activity by the first half of next year. Going forward, activity is expected to be negatively affected by rapidly diminishing marginal returns from Covid normalization, high and disseminated inflation, the lagged impact from recent monetary and financial tightening, gradually more exigent credit conditions and softer external impulse to growth given…”

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The Inter-American Dialogue publishes the Latin America Advisor every business day for a distinguished membership of informed corporate leaders, scholars, and government officials invested in Latin America’s development and future. The Advisor‘s highly regarded Q&A section covers questions submitted by subscribers themselves. Commentators regularly include heads of state, business leaders, diplomats, economists, analysts, and thought leaders from around the world. Many of the world’s largest and fastest-growing companies subscribe to the Advisor. To subscribe, click here. For terms and conditions, click here. For more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.
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