The International Monetary Fund estimated a slowdown in GDP growth for Latin America and the Caribbean in 2025, according to the organization in its World Economic Outlook report, released last week.

This cut is primarily due to a 0.3 % contraction in Mexico’s economy due to tariffs imposed by the United States.

According to the IMF, “economic growth in Latin America and the Caribbean is expected to slow in 2025 to 2.0 % from last year’s 2.4 % expansion, compared to a January estimate of 2.5 % growth.”

The contraction of the Mexican economy is compounded by uncertainty associated with Trump’s measures and geopolitical tensions, in addition to tightening financing conditions.

Meanwhile, in the Latin American context, “growth in Brazil, the region’s largest economy, is estimated to slow to 2.0 % from a January estimate of 2.2 %.” In the case of Argentina, the growth forecast is 5.5 %; Colombia 2.4 %; Chile 2.0 %; and Peru 2.8 %.

Central America was not left out of the report, with the IMF indicating an estimated growth of 3.8 % this year, “slightly slower than the 3.9 % rate in 2024, while the Caribbean economy is expected to slow to 4.2 % in 2025 from 12.1 % last year.”

M.Pino

Source: americaeconomia

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Growth in the region made up of Latin America and the Caribbean is a priority for the International Monetary Fund. For this reason, it has urged governments to allocate the necessary resources to face current economic, fiscal and social challenges.

On Friday, October 25, the international organization asked representatives of Latin America and the Caribbean to include in their agenda the discussion of reforms that will allow them to boost their economy.

“In its Regional Economic Outlook, the IMF projected that the region’s growth will accelerate from 2.1 percent this year to 2.5 percent in 2025. But the expansion of the so-called AL7 group, which includes Brazil, Chile, Colombia, Mexico, Paraguay, Peru and Uruguay, is projected to slow from 2.4 percent in 2024 to 2.0 percent next year.”

According to Rodrigo Valdés, director of the IMF’s Western Hemisphere Department, “the urgency of deepening reforms for growth really applies to almost all economies in the region.”

According to the IMF’s estimates of medium-term growth for the region (excluding Argentina and Venezuela), it “is projected to be around 2.5 percent annually over the next five years and will likely remain close to its low historical average. This reflects persistent and unresolved challenges, such as low investment, slow productivity growth and demographic changes.”

The IMF stressed in its report that low economic growth is marked by factors such as social discontent, entrenched populist policies, “slowdown in the expansion of the labor force due to falling birth rates and an aging population,” among others.

The absence of fiscal consolidation reforms will cause the region’s debt to continue to grow, according to the IMF, which has asked governments to increase personal income tax collection.

M.Pino

Source: jornada

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Digital payments have experienced rapid growth in Central America and the Caribbean, according to the recent Inter-American Development Bank (IDB) report titled “Towards Greater Financial Inclusion for Development.”

The IDB published this Monday that “the percentage of adults in this region who own mobile money accounts has doubled, going from 4 % to 8 % between 2017 and 2021.”

According to the agency, the use of digital platforms facilitates savings, provides users with security and speed, in addition to reducing costs associated with domestic payments and international remittances.

Despite this increase in the use of digital channels, the IDB points out that the region still “must close gaps with other parts of the world both in the adoption of digital financial tools and in financial inclusion policies.”

Tomás Bermúdez, general manager of the IDB for the region of Central America, Mexico, Panama, the Dominican Republic and Haiti, cited in the report, highlights the need to promote policies that allow greater “availability and access to financial services such as credit, savings, payment of services.”

Digital payments constitute a key factor in electronic commerce in Latin America and the Caribbean. “In 2020, the value of transactions of this type exceeded 38 billion US dollars in the region and is expected to exceed 100 billion in 2025.”

M.Pino

Source: swissinfo

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The United Nations (UN) forecasts lower economic growth for Latin America and the Caribbean in 2024, projecting a 1.6% increase in regional GDP, compared to an estimated 2.2% increase in 2023.

This forecast is attributed to restrictive monetary policies that will negatively impact aggregate demand, slower external demand that will limit export growth and factors such as volatility in global financial markets.

The report also highlights the potential for a slowdown in the economies of the United States and China, which could affect exports, remittances and capital inflows to the region.

The lack of macroeconomic policies and weak investment in Latin America hampered the region’s ability to address challenges such as climate change and meteorological phenomena.

As for annual inflation, it is estimated to decline from 6.8% to 4.3% in 2024, excluding Argentina and Venezuela, where it is expected to be higher. In addition, slower employment growth and an increase in the unemployment rate are projected in some economies.

K. Tovar

Source: Descifrado

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