Economic growth in Latin America and the Caribbean will be lower than expected at 1.8 percent this year due to the war in Ukraine, a UN body said Wednesday.
In 2021, the region’s gross domestic product (GDP) was 6.2 percent, and the UN Economic Commission for Latin America and the Caribbean (ECLAC) in January forecast growth of 2.1 percent for 2022. But in a statement Wednesday, it adjusted the figure downward, saying the war has heightened inflation, increasing financial volatility and costs.
“The economies of Latin America and the Caribbean face a complex juncture in 2022 due to the war between Russia and Ukraine, which ushers in a new source of uncertainty for the world economy,” it said.
The economies of South America are projected to grow by 1.5 percent, Central America and Mexico by 2.3 percent, and the Caribbean (excluding Guyana) by 4.7 percent, said the ECLAC.
“The war in Ukraine has also caused an increase in commodity prices, mainly in fossil fuels, some metals, food and fertilizers,” it added. “The region is also experiencing more difficulty in recovering from the Covid pandemic than anticipated, which is also adding to inflation.”
Along with higher costs due to supply chain disruptions, the price increase has caused inflation in some countries to reach historic highs in 2022.
Last month, regional inflation was estimated at 7.5 percent, and many central banks anticipate sustained high inflation for the rest of the year. Among Latin American countries, only Ecuador, Panama and Bolivia are expected to maintain inflation rates below five percent through 2022.
As growth slows, the agency also warned of higher unemployment rates.
For Brazil, the region’s largest economy, the ECLAC forecast growth of 0.4 percent for 2022.
Its projection for Mexico was 1.7 percent, for Argentina 3.0 percent, Venezuela 5.0 percent, Colombia 4.8 percent, Chile 1.5 percent, Ecuador 2.2 percent, Peru 2.5 percent and Costa Rica 3.7 percent.
Credit: Yahoo News