This low growth reflects “the lack of structural reforms that keep productivity low in a less favorable global environment, which has generated strong inflationary pressures, intense monetary tightening and a context of high political risk in its main economies that is holding back consumption and investment” , according to the report.
The conflict between Russia and Ukraine has aggravated the problem of inflation in the region. In this framework, the Caribbean countries are the most vulnerable, since they import most of the energy and food.
Country-by-country perspective
The report notes that for Argentina will need even more time to recover from the financial crisis that affected the country in 2018.
Meanwhile, it cannot be ruled out that Chile will enter a recession in 2023. Despite its good performance in 2021, the rise in rates and constitutional uncertainty are holding back investments and economic activity.
Among the other large markets in the region, growth in 2022 and 2023 will be weak in Brazil (annual average of 1.2%) and stronger in Colombia (2.9%) and Peru (3.4%). Mexico’s economy will not return to pre-pandemic levels until 2023.
The weight of climate change
The vulnerability to climate change adds to the challenges facing the region. The most extreme weather events, such as hurricanes, floods and droughts, already affect infrastructure, agriculture, tourism and power generation in the region.
Latin America is a pioneer in the energy transition, with the cleanest electricity mix in the world. But the energy transition in the region, mainly focused on hydropower, is losing momentumas the largest countries in the region are moving in the opposite direction.
“The region needs to step up investments in other green energy sources, such as wind and solar, to achieve net-zero emissions by 2050 and avoid an even weaker growth trajectory,” the report warns.
Source: Ambito
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