IMF Raises Latam 2022 Growth Forecasts; Sees Inflation Dip In 2023  

 

• The International Monetary Fund on Tuesday raised its 2022 economic growth forecasts for Latin America (Latam) and the Caribbean and lowered its growth projection for 2023 on shifting commodity prices and external financing conditions.
• The IMF lifted its growth estimate for this year to 3.5% from the 3.0% forecast in July, but its projection for global output growth this year was unchanged at 3.2%. In the region, Brazil is seen growing 2.8% this year, a 1.1pp increase from the July estimate, while Mexico is seen growing 0.3pp slower at 2.1%.
• For next year, the IMF's projection for output expansion in Latam and the Caribbean was lowered by 0.3pp to 1.7%. Globally, the figure dropped from 0.2pp to 2.7%.  This year's improved regional forecast rests on "stronger-than-expected activity in the first half of 2022 on favourable commodity prices, still-favourable external financing conditions, and the normalization of activities in contact-intensive sectors.
• However, growth in the region is expected to slow in late 2022 and 2023 as partner country growth weakens, financial conditions tighten, and commodity prices soften. The World Bank projections showed Latam and the Caribbean regional economic output growing by 3% this year and slowing to 1.6% in 2023, a growth rate described as “insufficient to significantly reduce poverty”.
• Inflation continues to be a concern across developed and emerging markets, according to the IMF's outlook. For emerging and developing economies, the fund sees inflation rising to 9.9% in 2022 from 5.9% in 2021, before declining to 8.1% next year. Consumer prices are projected to end the year up 14.6% and expected that rate to slow to 9.5% next year.
• Importantly, the 2023 revision to the inflation forecasts for Latin America and the Caribbean, up by 2.2 percentage points, was the largest for any region.

(Source: Reuters)