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The IMF has raised its growth forecast for Latin America to 6.3% in 2021

The IMF has raised its growth forecast for Latin America to 6.3% in 2021

Shopping Street in Rio de Janeiro (Reuters)

The International Monetary Fund on Tuesday upheld economic growth forecasts for Latin America and the Caribbean, but cut plans for two major economies in the region, Brazil and Mexico.

By 2021, Latin American and Caribbean gross domestic product (GDP) It will expand by 6.3%. Amount It was up 0.5 per cent compared to the forecast in JulyThe IMF said in an update to its “World Economic Outlook” (WEO) report.

But this is not the case in Brazil (5.2%) and Mexico (6.2%) because in both cases they are 0.1 percent lower than previously predicted.

IMF forecasts for the region
IMF forecasts for the region

By 2022, Latin America and the Caribbean economy growing Individual 3.0%, That’s a prediction 0.2 percent lower than previously expectedIMF noted. He expected Brazil’s GDP expansion to slow next year, to 1.5% (-0.4% in July), and Mexico’s 4.0% (-0.2%).

Latin America and the Caribbean, an area severely affected by Govt 7% GDP contraction in 2020.

New economic growth forecasts are being released during the IMF and World Bank annual meetings to be held virtually in Washington this week due to the epidemic, although some delegates will attend in person for the first time since 2019.

High inflation

On the other hand, the IMF estimated that it would contain Latin America 9.3% inflation in 2021, Which means it will be The most expensive area in the world.

Geeta Gopinath, chief economist at the IMF, told a news conference that widespread inflation has been detected in Latin America. Affected by rising energy and raw material prices, And different rhythms of national demands. Gopinath suggested that “it is important for countries to keep their monetary activities in line with the specific circumstances of each country.”

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The IMF estimates that by 2022, inflation in Latin America will fall to 7.8%, an even higher figure.

In his comments, Gopinath also spoke about Argentina’s position, saying the fund had left its inflation forecast empty. The chief economist of the fund warned that inflation expectations in Argentina were “unsafe” due in part to the “high dependence on monetary aid”. “We continue to work closely with the Argentine government at the technical level to find solutions for sustainable development,” Gopinath said.

Global image

Global growth for 2021 is projected at 5.9%, compared to 6% in July.

But IMF chief economist Geeta Gopinath warned that the figures hid major setbacks in some countries.The outlook of the group of low-income developing countries was considerably darker due to poor epidemiological dynamics.”.

Along with the tidal wave of infections of delta variants, developing countries have significantly lower vaccination rates.

About 58% of the population in advanced economies is already fully vaccinated, 36% in emerging economies and less than 5% in poorer countries, the IMF underscores. Week in Washington.

Another global challenge is logistics issues, which are pushing global supply chains out of sync, which can lead to blockages in ports, shortages of various goods and rising shipping costs.

as a consequence, The IMF lowered its 2021 growth forecast for the US economy to 6%From 7% expected in July. But he has revised it to 5.2% by 2022, taking into account the baronic spending plans planned by the Joe Biden government, for several trillion dollars.

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Instead, the fund revised its growth forecast for 2021 Euro area (+0.4 points, at 5%). But here, again, the imbalances are large, with an increase in its growth rating for France (+0.5 points to 6.3%), accelerating the vaccination of its population, and the cut for Germany, which suffers from a shortage of semiconductors (-0.5 points to 3.1%).

China, The world’s second-largest economy, will continue to grow globally (-0.1 points to 8%) with the United States and India (9.5%, unchanged) after the outbreak in late 2019, the IMF said. .

Home building in Beijing.  The real estate sector in the country has been hit hard in recent weeks (Reuters)
Home building in Beijing. The real estate sector in the country has been hit hard in recent weeks (Reuters)

“Dangerous Difference”

For Gopinath, it is very clear that “the epidemic will not end anywhere until it ends everywhere.” He warned that the protracted recession could “raise $ 5.3 trillion in world GDP over the next five years.”

According to the IMF chief economist, the biggest concern is the “dangerous difference” in economic opportunities between countries.

The GDP of advanced economies should return to its pre-epidemic path by 2022. But the GDP of emerging markets and emerging economies (excluding China) is expected to be 5.5% below previous forecasts. This is a significant reduction in the quality of life of these people, which could lead to an epidemic in 2024. “

“Food prices are so high in low-income countries where food insecurity is most severe, increasing the burden on poor families and the risk of social unrest,” Gopinath said.

Still, in advanced and emerging economies, the IMF predicts that inflation will return to pre-epidemic levels by the middle of next year.

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For the company, controlling the epidemic is an absolute priority.

“The world community must redouble its efforts to ensure equal access to vaccines for all countries, eliminate doubts about vaccines when there is an adequate supply, and ensure better economic opportunities for all,” Gopinath concluded.

(With information from AFP)