The Economic Commission for Latin America and the Caribbean (ECLAC) released its annual report on Tuesday, Economic Survey of Latin America and the Caribbean, 2023. Financing a sustainable transition: investment to grow and face climate change, in which they estimate a worsening in the projections for Argentina.
In a context of growing economic and political uncertainty that deepens the impact of the crisis, ECLAC estimates that the drop in national GDP will be 3%. This is a setback compared to the 2% forecast in the month of April. For 2024 the drop is more moderate, at a rate of 1.6%.
The report predicts that the region’s economies will maintain low levels of growth this year and next, “affected by a very complex negative global and regional economic outlook.” And he adds: “The dynamics of the world economy remains on a path of low economic growth and global trade. Despite the falls in the inflation rate, the developed countries will probably continue with their contractive monetary policies, so a significant drop in external interest rates cannot be expected this year, and financing costs for our countries will remain high. .”
Consequently, the estimates for 2023 are for regional average GDP growth of 1.7%. Meanwhile, for 2024 a slight decrease in the growth rate is projected that would lead the regional gross domestic product to increase by 1.5%. In the same sense, ECLAC projects that all the subregions will exhibit lower growth compared to 2022: South America would grow by 1.2% (3.7% in 2022), the group made up of Central America and Mexico by 3.0%. (3.4% in 2022), and the Caribbean (not including Guyana) 4.2% (6.3% in 2022).
Faced with this growth slowdown, the organism warns that it will result in a slowdown in job creation “whose growth is estimated at 1.9% in 2023 and 1.1% in 2024. Likewise, there is concern about the quality of employment in this context of low growth, since it is very likely that workers will become more vulnerable, have lower levels of social protection and are employed in less productive sectors.”
In relation to the public debt of the countries of the region, the ECLAC document indicates that “it remains at high levels with respect to GDP, which, together with the increase in external and internal interest rates and an expected fall in tax revenues as a result of lower growth, leads to to limited fiscal space for the region as a whole.”
Argentina is going through a debt crisis aggravated by the rise in interest rates by the FED. Without dollars to meet the next maturities, the country is subject to the demands of the IMF. Fiscal adjustment by cutting social items, raising public service rates, reducing the state salary and further devaluation, are the old recipes of the organization that will only increase the hardships of the working people.
ECLAC’s perspectives, which foresee a 3% drop in GDP this year, are behind the projections of the 2023 Budget, where growth of 2% was estimated. In addition to the impact of the record drought, the impact of the adjustment, rising inflation and reserves in the red, among other factors, give rise to a slowdown in the economy that could begin to be felt in the labor “market”. But not everyone loses, the main economic groups in the country continued to win, contrary to what happens with popular income. Canceling the agreement with the IMF is a first step, together with a set of emergency measures as proposed by the Unity Left Front, so that the capitalists pay for the crisis.