ISMR December 2021/January 2022 | Page 29

REGIONAL REPORT

“ The International Monetary Fund expects the region to grow by 6.3 per cent in 2021 and three per cent in 2022 .”

According to analyst Focus Economics , regional GDP growth in Latin America will see a significant slowdown in 2022 due to a ‘ less favourable base effect and softer increases in domestic and external demand , as well as some normalisation in fiscal and monetary policy stances .’ That said , pandemic-related and political uncertainty will remain high mainly due to new COVID-19 variants and elections in some countries .

“ The good news is that after taking a very heavy toll for much of 2021 , the pandemic appears to be receding in many parts of Latin America and the Caribbean . Vaccination campaigns have helped to mitigate the pandemic ’ s impact but there are still important inequities in the availability of vaccines and these need to be addressed ,” commented the International Monetary Fund ( IMF ), which now expects the Latin America and Caribbean region to grow by 6.3 per cent in 2021 and by three per cent in 2022 .
However , it added that many tourism-dependent economies in the Caribbean continue to face a very challenging environment . And “ even in those countries that have bounced back quickly , the recovery in employment has been very uneven . The young , the less educated and women are bearing a heavy toll and there has been important damage to human capital during the pandemic . These trends will probably take many years to reverse ,” said the IMF .
Inflation and COVID-19

THE PATH TO RECOVERY

We highlight trends and economic forecasts for the Latin America and Caribbean region .
Activity in Latin America and the Caribbean gained momentum throughout the second half of last year and this continued into the early part of this year .
Inflation has , however , become an important feature for most of the region . Rising commodity and food prices , global increases in goods prices , sector-specific constraints and supply chain disruptions are all pushing consumer prices higher . Many central banks in the region have reacted to these pressures by raising policy rates to underscore commitment to their inflation goals .
“ It is likely that these interest rate increases will continue in many countries in the coming months and , if inflation expectations become less well-anchored , policymakers may have to react even more assertively ,” continued the IMF .
“ We are conscious that the toll of the COVID crisis has been very heavy in Latin America . We ’ ve seen substantial increases in poverty across the region . I think we ’ re seeing a lot of social strains across the region that are being manifested in demonstrations and broader concerns . We see that it will take some time , perhaps not even in our five-year forecast horizon , for the region ’ s GDP to return to the pre-crisis trend . We are concerned that labour participation is much lower than it has been in the past and has been slow to recover , and productivity is potentially lower ,” commented Nigel Chalk , Acting Director , Western Hemisphere Department , IMF , at a regional briefing in October 2021 .
“ All of these underlying , really important , supply-sided reforms will need to be taken both to raise participation ; encourage ( particularly females and young workers ) to return to the labour force and to improve productivity and increase private sector participation in the economy . It will take particular policy efforts to reverse the damage done by COVID ,” he added .
ISMR December 2021 / January 2022 | sheetmetalplus . com | 29