MercoPress. South Atlantic News Agency

ECLAC's outlook for the region is grim, but better than in April

Salazar-Xirinachs spoke of a disease of low growth

The latest report from the Economic Commission for Latin America and the Caribbean (ECLAC) released Tuesday in Santiago foresees low regional growth for at least the next two years. For 2023, the organization projects a 1.7% increase in the Gross Domestic Product (GDP) while in 2024 it would fall to 1.5%, while the world's GDP is expected to grow by 3% in 2023 and 2024, down from 3.5% in 2022.

Hence, between 2014 and 2023, the average growth would be even lower than the 2% recorded during the so-called crisis of the 1980s, a period dubbed the first lost decade in the region.

“With this disease of low growth... it is going to be very difficult to reduce poverty, informality, inequality and also to create quality employment,” ECLAC Executive Secretary José Manuel Salazar-Xirinachs.

“There are many things that are at risk: we could lose social peace, we could have increasingly unequal and violent societies, and we will have millions more people migrating,” he added.

Latin America is facing high inflation, ballooning interest rates, increasing public debt, falling investment, growing demand, and social unrest.

The 302-page “Economic Survey of Latin America and the Caribbean 2023. Financing a Sustainable Transition: Investing for Growth and Confronting Climate Change,” report also points out that the 1.7% regional growth forecast still represents an upward revision from the 1.2% that ECLAC had predicted in April, due to performances above expectations in Mexico and Brazil, Latin America's two largest economies.

“The outlook is not very optimistic for labor markets in Latin America and the Caribbean,” ECLAC also said. The number of unemployed people in the region could increase by 1.9% in 2023 and 1.1% in 2024, representing a significant slowdown from the 5.4% growth in 2022. In ECLAC's view regional unemployment will be 6.8% in 2023 and 7.1% next year. In 2022 it was 7%.

“There is concern about the quality of employment in the region,” the organization said, after explaining that a context of low growth means that “workers become more vulnerable, have lower levels of social protection and are employed in increasingly less productive sectors.”

This, in turn, would lead to a reduction in average wages and an increase in poverty and inequality in the region, ECLAC indicated in its report.