Near shore, green economy, Latin America, Caribbean – good growth opportunities for World Bank

According to the global lender, growth projections for 2023 in the region have been consistently revised downwards over the past six months. The estimate for 2024 and 2025 is 1.4%, “too low to make significant progress in poverty reduction”.

“The region has largely recovered from the pandemic crisis, but unfortunately has returned to the low growth levels of the previous decade,” said Carlos Felipe Jaramillo, World Bank Vice President for Latin America and the Caribbean.

“Countries must urgently accelerate inclusive growth.”

Two decades of improved macroeconomic management have contributed to overall economic resilience in Latin America and the Caribbean, with the debt ratio falling to 64.7% of GDP from 66.3% last year.

Poverty levels have fallen and employment has risen, with both largely returning to pre-pandemic levels. Excluding Argentina, inflation is expected to ease from 7.9% in 2022 to 5.0% this year.

But the region is spending beyond its means and budget deficits are expected to be 2.7% of output this year.

Better coordination

Over the years, LAC has offered investors a tough environment of rapidly changing regulations, high transport costs and an unevenly skilled workforce, making Canada, the United Kingdom and sometimes the United States more attractive than the regional behemoths of Brazil and Mexico.

This includes investor concerns about local costs of capital, real estate and taxes, according to the World Bank.

“The LAC region remains one of the least integrated regions, while trade openness and (foreign direct) investment flows have largely stagnated or declined over the past 20 years,” said William Maloney, chief economist for Latin America and the Caribbean. Bank.

“Countries need to find ways to become more attractive and take advantage of near-shore trends,” he said, while leveraging the region’s advantages in renewable energy production and green transition products.