[Economics] The Latin American economy will experience a "cyclical rebound"

[#Wittels-]

London.- Despite the "headwinds" suffered by Latin America as a result of inflation, high interest rates and global economic weakness, the region is heading towards a "cyclical rebound" at the end of the year that will last until 2024 , according to the Intelligence Unit of the British group The Economist.

Analysts anticipated that in the coming months inflation will begin to moderate and the Latin American centrals will cut rates, although the region's joint Gross Domestic Product (GDP) will grow "only" 1.3% in 2023.

During a virtual conference, The Economist experts anticipated that Brazil, Chile and Peru will lower their interest rates in the second half of this year, followed by Colombia and Mexico next year.

“This will be the seed of a cyclical upturn in the economy that will extend to 2024,” said Robert Wood, principal economist at the Intelligence Unit for Latin America and the Caribbean.

All in all, "without progress in terms of reforms that boosted productivity, we do not expect a stellar year either," stressed the analyst, who anticipates growth of between 2% and 2.5% in 2024.

The decisions made by the central banks of large countries such as Brazil and Mexico will mark the mood of investors, hardly Wood, who stressed at the same time that countries such as Costa Rica and Uruguay have already led the way with rate cuts.

The Economist Intelligence Unit highlighted at the same time that Foreign Direct Investment (FDI) in Latin America rebounded in 2022 to its highest level in a decade.

Investments that were delayed by the covid-19 pandemic, along with the high price of raw materials, have contributed to that "boom," said analyst Erica Fraga.

As a third determining factor for this increase in investment, Fraga pointed to the tendency for US firms to bet on closer production points, given the geopolitical tensions in the Pacific and global problems in supply chains.

"This has been particularly evident in Mexico, due to its proximity to the United States, but we believe that other countries in the region can benefit or be affected," added the expert.

The diversification of some Latin American economies with respect to raw materials has also been "positive" for the regional economy, he stressed. EFE

 

Link: https://elmercurio.com.ec/2023/04/27/la-economia-de-latinoamerica-vivira-un-repunte-ciclico/