IMF ups 2022 GDP outlook for Latin America, Caribbean

The IMF increased its projection for 2022 GDP growth in Latin America and the Caribbean due, among other factors, to higher expectations in Brazil. 

The multilateral sees the region’s GDP expanding 3.5% this year compared with a forecast of 3% in July. For next year, the IMF projects economic growth of 1.7%, down from a previous forecast of 2%. 

The IMF’s global GDP growth forecast of 3.2% for 2022 is unchanged.

"Growth for 2022 [in Latin America and the Caribbean] is higher by 0.5 percentage point than projected in July, reflecting stronger-than-expected activity in the first half of 2022 on the back of favorable commodity prices, still-favorable external financing conditions, and the normalization of activities in contact-intensive sectors," the IMF said in its World Economic Outlook report.  

"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."

Brazil's GDP is predicted to grow 2.8% this year compared with a previous projection of 1.7%. For 2023, GDP is forecast to expand 1.0%, down from 1.1% projected in July by the IMF.

Mexico, the second largest economy in the region after Brazil, is projected to expand 2.1% this year and 1.2% in 2023. Previously the IMF was projecting 2.4% this year and 1.2% in 2023.

INFLATION 

The IMF sees consumer prices rising 14.6% this year in Latin America and the Caribbean but expects the rate to decline to 9.5% next year. 

Inflationary pressures in the region and globally have been a major factor of economic uncertainty, as central banks have increased benchmark rates to rein in price rises.