World Bank Projects 1.8% Growth for Latin America in 2024

More significant economic activity in the United States could benefit Central America and the Caribbean. According to the World Bank, Latin America’s Gross Domestic Product (GDP) will grow by 1.8% in 2024, down five-tenths from the previous report released earlier this year. However, by 2025, the World Bank expects the region to grow 2.7%, two-tenths more than the forecast from January, due to the normalization of interest rates and a further fall in inflation.

The projections indicate that commodity prices will support the region’s exports, although slow growth in China could limit demand for these products. These predictions are subject to several risks, mainly on the downside, such as tighter global financial conditions, high local debt levels, and extreme weather events linked to climate change.

On the other hand, more robust economic activity in the United States could positively impact Central America and the Caribbean. “Despite the economic difficulties that Latin America and the Caribbean will face in 2024, a gradual recovery is expected in 2025, supported by lower inflation and looser monetary policy,” the World Bank said.

Growth by Country

By early 2024, there were some signs of economic consolidation, although the recovery has been uneven across the region. Brazil and Mexico have maintained business confidence, while Colombia has shown improvement, and Argentina has experienced a sharp economic contraction.

Brazil’s growth will be moderated to 2% in 2024 and 2.2% in 2025, supported by cuts in the monetary policy rate and the recovery of private consumption and investment. In Mexico, growth will slow to 2.3% in 2024 and 2.1% in 2025, constrained by tight monetary policy despite the expected decline in inflation and interest rates.

Argentina is expected to contract by 3.5% in 2024 but recover to 5% growth in 2025 as economic imbalances are addressed and inflation declines. In Colombia, growth is forecast to increase to 1.3% in 2024 and 3.2% in 2025, driven by a recovery in private consumption and exports. Chile will grow by 2.6% in 2024 and 2.2% in 2025, supported by external demand for green energy commodities and interest rate cuts.

Peru is projected to grow by 2.9% in 2024 and 2.6% in 2025, driven by lower inflation and monetary policy rate cuts that will stimulate private consumption.

In the Caribbean region, a growth of 7.1% is expected in 2024, with solid performance continuing in 2025 at 5.7%. These numbers exclude Guyana, whose projected growth in 2024 will be 3.9% and 4% in 2025, driven by a moderate recovery in tourism and remittances.

Finally, due to a faster increase in remittances, growth in Central America will weaken to 3.2% in 2024 and recover to 3.5% in 2025.

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