IMF Lifts LATAM, Caribbean 2023 GDP Growth Estimate

• The International Monetary Fund (IMF) raised its 2023 output growth estimate for Latin America and the Caribbean to 2.3% from July's 1.9% due to faster expected growth in Brazil and Mexico, the fund said in a report on Tuesday.
• The 2.3% estimate for 2023 follows the growth of 4.1% last year, with the slowdown due to a "normalization of growth along with the effect of tighter policies, a weaker external environment, and lower commodity prices."
• The upward revision to 2023 since July reflects stronger-than-expected growth in Brazil, revised upward by 1.0 percentage points to 3.1%, driven by buoyant agriculture and resilient services in the first half of 2023.
• Consumption has also remained strong, supported by fiscal stimulus. The upward revision for the region also reflects stronger-than-expected growth in Mexico, revised upward by 0.6 percentage points to 3.2%, with the delayed post-pandemic recovery taking hold in construction and services and spillovers from resilient US demand.
• The major regional economies expected to see a contraction this year are Argentina, with a -2.5% GDP growth estimate and Chile, with -0.5%. This could be due to Argentina facing steady depreciation of the peso, negative central bank reserves and an economy struggling due to the impact of drought on the agricultural sector. In the case of Chile, the world’s largest copper producer, the contraction likely represents the impact of operational issues that have hit copper mining and production in the country.
• Notably, for the Caribbean segment only, real GDP of 9.8% and 8.3% is forecasted for 2023 and 2024, respectively, down from 13.9% in 2022. Consumer prices are anticipated to stay elevated in 2023 (13.2%) relative to 2022 (12.6%); however, it is expected to moderate in 2024 (6.5%).

(Sources: IMF & Reuters)