April 12, 2024
The World Bank has revised downward its outlook for growth in Latin America and the Caribbean.
Chief Economist at the World Bank with responsibility for the region, William Maloney, says if the projected GDP outlook for Argentina was removed, the region’s growth for this year would be 2.2 per cent.
“We’re looking at 1.6 per cent forecast for this year, and then 2.7 per cent going forward. Both of these are below or at the world levels. It’s important to highlight that these low levels of growth are not a result of the pandemic and not purely the result of high interest rates. During the decade of the 2010s, we grew at 2.2 per cent while the rest of the world is growing at 3.1 per cent, all of which suggest that we have structural problems in our economies that we need to confront,” he suggested.
Mr. Maloney said, while there is growth, recovery from the pandemic is still incomplete across the region as the fiscal and debt situation remains challenging.
“Deficits remain high as spending remains strong and debt service remains heavy. That gives us limited fiscal space for investment and that contributes to current account deficits,” he said, adding that higher interest rates have stressed the banking sectors.
Still, Mr. Maloney said financial sectors remain sound and the monetary authorities have the situation largely under control.
“Social indicators are slowly returning to pre-pandemic levels. Employment has largely recovered, less so for low skilled workers, and aging workers have left the labour market and have not come back. Wage recovery lags for women and high skilled workers. Poverty is now approaching 2019 levels and inequality is slightly improving, but that’s largely because the wage gains for highly skilled workers have lagged,” he said.