Economic outlook for Latin America and the Caribbean in 2024
FOR JANUARY, I have been looking at the growth projections for the global economy for this year. The International Monetary Fund (IMF), in its report of October 2023, projected that the world economy would achieve growth of 2.9 per cent in 2024, remaining well below the historical average of 3.8 per cent.
The discussions at the World Economic Forum (WEF) urged caution about projections, given the many uncertainties, but, while seeing opportunities, did see global growth weakening in 2024.
This week, I am looking specifically at the economic projections for Latin America and the Caribbean (LAC) for this year.
This is the region to which Jamaica and its CARICOM partners belong and in which they have free trade agreements. CARICOM, as part of its trade agenda, has expressed its intention to upgrade these agreements with the aim of expanding trade and investments. For many years, hemispheric institutions, such as the Inter-American Development Bank, promoted deepening regional integration within the LAC, not just in the Caribbean, but with Mexico, Central and South America. There has been talk of strengthening regional bodies, such as the Association of Caribbean States (ACS) and the Community of Latin American and Caribbean States (CELAC).
LAC ECONOMIC OUTLOOK
In the IMF’s 2023 report, the 2024 growth projection for Latin America and the Caribbean was set at 2.3 per cent overall. The IMF percentage growth projections for CARICOM members individually were: Antigua and Barbuda 5.4; The Bahamas 1.8; Barbados 3.9; Belize 3; Dominica 4.6; Grenada 3.8; Guyana 26.6; Haiti 1.4; Jamaica 1.8; Suriname 3.3; and Trinidad and Tobago 2.2. Except for Suriname and Dominica, these are projected moderate declines from 2023.
The December 2023 Preliminary Overview of the Economies of Latin America and the Caribbean report produced by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), for 2024, projects growth in the region of 1.9 per cent, also showing a decline from 2023.
Growth for the CARICOM region overall, including Guyana, is projected at 8.3 per cent and, excluding Guyana, at 2.6 per cent. For the individual CARICOM members, ECLAC projects growth as: Antigua and Barbuda 8.2; The Bahamas 2; Barbados 3.2; Belize 3.6; Dominica 3.4; Grenada 3.6; Guyana 29.9; Jamaica 1.9; St Vincent & the Grenadines 5.5; St Lucia 4.5; St Kitts/Nevis 3.6; Suriname 3; and Trinidad and Tobago 2.4. There are some slight variations in the figures given by the IMF and ECLAC. As was stated at the WEF, these are estimates and can go up or down depending on the situations affecting the economy.
ECLAC indicates that, in 2024, the LAC region will stay on a path of low growth with all subregions registering lower growth than in 2023, thus continuing to see declining job creation, with growth projected at one per cent, and continuing informality and gender gaps. Inflation will be at about 3.2 per cent.
Here in Jamaica, there should be concern about the growth projections for the country by both the IMF and ECLAC.
ECLAC sees it necessary for the region to escalate productive development policies, focusing on strategic, dynamic sectors; promoting public and private investment; and adjusting the financing framework to enhance resource mobilisation.
IMPACT OF GEOPOLITICS/GEOECONOMICS
LAC is impacted by what happens in the international community and economy. Thus, there has to be serious concern about the wars in Europe and the Middle East, and their possible escalation, which could have even greater negative economic impacts, such as further increases in the price of oil and food, and impeding supply chains.
Being in the Western Hemisphere, the LAC countries also have to be mindful of what is happening in the USA, a principal trading partner and a country which has significant influence in the region. The lead-up to the presidential and congressional elections there in November will be closely watched. They also have to be concerned about the relationship between the USA and China, and developments in China. China has been an increasing development partner in the region and the 5th Meeting of China and CELAC is to be held this year. CELAC’s meeting with the European Union (EU) was held last year, aimed at reviving and strengthening their relationship. Note that Brazil is a key member of the BRICS.
There also has to be concern about political developments in various countries in South and Central America, and the Caribbean. Presidential elections are to be held in El Salvador, Panama, the Dominican Republic, Mexico, Uruguay, and possibly Venezuela. Elections could possibly be held in Jamaica and Trinidad and Tobago as well, if conditions are deemed right. The major concerns for the Caribbean countries are the situation in Haiti and the border controversy between Venezuela and Guyana. These will be items on the agendas of the CARICOM Heads of Government Conference to be held in February and the CELAC Summit to be held in St Vincent and the Grenadines in March.
In spite of the negatives and uncertainties, there are writers who can see positives for the region and consider the glass as half full. Some of these positives, which have been highlighted by others, include:
1. A relatively young population, which has positive implications for investment, consumption, and competitiveness.
2. Measures to increase productivity can be implemented, which can have rapid impact.
3. Continuing to implement prudent monetary policies and macroeconomic management.
4. Potential to lead in solutions for decarbonisation (fossil fuels, forest maintenance/management) and food security.
5. Potential to benefit from near-shoring (relocating of manufacturing).
6. Expanding sustainable agriculture production.
7. Maintaining the LAC as a zone of peace.
The IMF has said that for the LAC region to realise its full growth potential, it will need to focus on adding value; ensuring international markets function properly; addressing unilateral protectionist measures; subsidies; and the imposition of rules, standards, certifications and other non-tariff barriers that neutralise the LAC’s environmental comparative and competitive advantages.
Some of these move us, at the multilateral level, towards the World Trade Organization’s 13th Ministerial Conference (MC13) in February, and, intra-regionally, calls for a re-examination of trade and economic relations within the LAC.