With Caribbean governments already frowning on recent reports that point to economic underperformance and food security challenges in the period ahead, the region could certainly have done without the most recent prognosis by the Economic Commission for Latin America and the Caribbean (ECLAC), going forward.
Just over a week ago, on October 19, ECLAC proffered a prediction that economic growth in Latin America and the Caribbean is likely to be around 1.4%, a deceleration over the region’s projected performance for this year. Regional growth for 2022 is forecast at 3.2%.
The United National regional body says in its assessment that Latin America and the Caribbean, like elsewhere across the globe is likely to continue to be impacted by the effects of the war in the Ukraine.
The report noted, as well, that higher levels of risk aversion, coupled with the world’s main central banks’ “more restrictive monetary policy” have impeded capital flows to emerging markets, including those in Latin America and the Caribbean. The report says that the posture of the banks have also helped to create currency depreciations that have had the effect of making it more onerous for countries in the region to easily secure development financing.
ECLAC’s prognosis makes no secret of the fact that next year, countries in Latin America and the Caribbean will have no choice but to confront an unfavourable international climate with forecasts for a deceleration in both global growth and trade, higher interest rates, and less global liquidity.
“On the domestic front, the region’s countries will confront a complex environment for fiscal and monetary policy again in 2023,” ECLAC says.
ECLAC says that in terms of monetary matters increased inflation led central banks in Latin America and the Caribbean, as in much of the rest of the world, to both raise policy rates and to reduce the growth of monetary aggregates. While ECLAC projects that this process will end in 2023, the effects of this restrictive policy on private consumption and investment will remain present during next year.
ECLAC says, meanwhile, that the region as a whole is likely to see public debt levels remain high in several countries in a large number of countries and that in an environment of high spending measures will have to be taken to strengthen fiscal sustainability and to expand fiscal space by bolstering public revenue.
The report says that all of the sub-regions are projected to experience lower growth next year while the Caribbean will grow by 3.1% next year – without including Guyana – versus 4.3% in 2022.
In the Caribbean, the ECLAC report says, inflation has affected real income and by extension, both consumption and production costs, the outcome of this being a negative impact on the competitiveness of exports involving both goods and tourism.
