The standard of living for many Latin Americans will fall this year due to slowing growth, high inflation and global uncertainty.yesterday avoided the International Monetary Fund (IMF).
This is mainly due to higher interest rates –which make credit more expensive– and the fall in the prices of raw materials –which the region exports–, Gustavo Adler, Nigel Chalk and Anna Ivanova, from the IMF Department, explain in a blog. for the Americas.
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And while the agency forecasts that one of the highest growth rates in its gross domestic product (GDP) will be that of Venezuela (6.5 percent), it points out that Chile will be located at the other end of the table, whose economy can be reached shrink 1.5 percent.
For his part, the IMF projects that Colombia will grow 1.1 percent in 2023, a lower forecast than the 2.2 percent previously projected.
Inflation is receding in many countries, although it will remain high in some nations such as Mexico (4.8 percent), Brazil (5.7 percent), Colombia (7.3 percent), Chile (5 percent), Uruguay (7.2 percent), Honduras (6.2 percent) or Nicaragua (6.1 percent).
And it will continue at stratospheric levels in Argentina, with forecasts of 60 percent, after almost 95 percent in 2022, or in Venezuela, with 150 percent.
Central bank intervention, cooling the economy by making the cost of money more expensive, does its thing, but core inflation, which excludes volatile prices like food and energy, will still remain high, at around 8 percent. percent in Brazil, Mexico and Chile, and even slightly more in Colombia.
«Slow growth, high inflation and global uncertainty mean that many people in the region will see their standard of living fall this year and will likely face increased anxiety about their future,» the experts say on the blog.
Social discontent
The growing social discontent, which was exacerbated during the pandemic, and the loss of confidence in public institutions have persisted in the region for some time.
And it is that the poorest were the most affected by the economic consequences of the covid despite government aid, «as evidenced by the considerable increase in poverty.»
The increase in food insecurity is, according to the blog’s authors, another symptom of the socioeconomic effects of the pandemic.
Instability not only hits the poorest but also the middle class, although to a lesser extent. “Many small businesses had during the lockdowns, and the wages of middle-income workers were eroded by the subsequent rise in prices,” the authors of the article explain.
The continued possibility of unrest can in turn erode confidence and affect economic activity. To change the wind, experts recommend carrying out structural economic reforms, although they affirm that it will be «an uphill battle.»
Onion, cassava and plantain, among the most expensive foods in Colombia.
Jaiver Nieto. TIME
The strategies
According to the IMF, the objective of governments should be to stimulate growth and meet the social needs of part of the population.
The policies «must require ensuring economic stability, stimulating growth and job creation, supporting entrepreneurship and addressing the pressing social needs faced by many people in the region,» the multilateral organization warned.
And he adds: «This will help mitigate social discontent and restore confidence in public institutions.»
To make it, central banks must continue to lower inflation in a «tenacious» way. Interest rates are not expected to rise further this year in some countries, although they will remain high «for some time.»
Governments must allocate funds to the poor and seek a reduction in public debt, without losing sight of the fact that confidence in their management will continue to fall unless «they make the rich pay their fair share of taxes.»
«These reforms will be the main means, over time, to raise the standard of living» of the inhabitants of Latin America and the Caribbean, conclude the authors of the article, published within the framework of the IMF’s review of economic forecasts.
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