The International Monetary Fund on Tuesday raised its 2022 economic growth forecasts for Latin America and the Caribbean and lowered its growth projection for 2023 on shifting commodity prices and external financing conditions.
The IMF lifted its growth estimate for this year to 3.5% from 3.0% forecast in July, while its projection for global output growth this year was unchanged at 3.2%.
In the region, Brazil is seen growing 2.8% this year, a 1.1 percentage point increase from the July estimate, while Mexico is seen growing 0.3 percentage point slower at 2.1%.
For next year, the IMF’s projection for output expansion in Latam and the Caribbean was lowered by 0.3 percentage point to 1.7%. Globally, the figure dropped 0.2 percentage point to 2.7%.
This year’s improved regional forecast rests on “stronger-than-expected activity in the first half of 2022 on favorable commodity prices, still-favorable external financing conditions, and the normalization of activities in contact-intensive sectors,” the fund said in its bi-annual World Economic Outlook.
“However, growth in the region is expected to slow in late 2022 and 2023 as partner country growth weakens, financial conditions tighten, and commodity prices soften.”
Last week, World Bank projections showed Latam and the Caribbean regional economic output growing by 3% this year and slowing to 1.6% in 2023, a growth rate described as insufficient to significantly reduce poverty.
Inflation continues to be a concern across developed and emerging markets, according to the IMF’s outlook.
For emerging and developing economies, the fund sees inflation rising to 9.9% in 2022 from 5.9% in 2021, before declining to 8.1% next year.
The fund sees consumer prices ending the year up 14.6% in Latam and the Caribbean, and expected that rate to slow to 9.5% next year.
The 2023 revision to the inflation forecasts for Latin America and the Caribbean, up by 2.2 percentage points, was the largest for any region.