By: Staff Writer
January 21, 2025
The International Monetary Fund (IMF) in their World Economic Outlook said that growth in Latin America and the Caribbean (LAC) declined in 2023 but rebounded in 2024.
The report said: “In the LAC growth is projected to decline from 2.2 percent in 2023 to 2.1 percent in 2024 before rebounding to 2.5 percent in 2025. In Brazil, growth is projected at 3.0 percent in 2024 and 2.2 percent in 2025. This is an upward revision of 0.9 percentage point for 2024, compared with July 2024 World Economic Outlook Update projections, owing to stronger private consumption and investment in the first half of the year from a tight labor market, government transfers, and smaller-than-anticipated disruptions from floods. However, with the still-restrictive monetary policy and the expected cooling of the labor market, growth is expected to moderate in 2025.”
In 2025, GDP growth across the region is projected to be slightly higher, at 2.5 percent according to the IMF and 2.4 percent according to ECLAC. That’s lower than the IMF’s 2025 global GDP growth projection of 3.3 percent.
The report continued: “In Mexico, growth is projected at 1.5 percent in 2024, reflecting weakening domestic demand on the back of monetary policy tightening, before slowing further to 1.3 percent in 2025 on a tighter fiscal stance. Overall, offsetting revisions leave the regional growth forecast broadly unchanged since April.”
Although growth has been gradual, there is good news for the region’s economy: the IMF’s World Economic Outlook says that inflation rates across the region have “dropped significantly from their peaks” and continue to decrease. Unemployment in the region is also at historically low levels.
The report also said: “For most countries in Latin America and the Caribbean, inflation rates have dropped significantly from their peaks and continue to be on a downward trend. However, large countries in the region have experienced upward revisions since the April 2024 World Economic Outlook that reflect a mix of (1) robust wage growth preventing faster disinflation in the services sector (Brazil, Mexico), (2) weather events (Colombia), and (3) hikes in regulated electricity tariffs (Chile).”
While the report notes that Latin America has been in a “trap of low growth capacity” over the last decade, with an average growth rate of 1 percent annually, the growth in 2024 was slightly higher than what ECLAC originally projected for the year—1.9 percent.