WASHINGTON (Realist English). The armed conflict in the Ukraine is shaking the global economy and increasing uncertainty about the prospects for Latin America and the Caribbean, according to a new forecast by the International Monetary Fund.
According to the IMF forecast, after a sharp rebound last year, growth is returning to its pre-pandemic trend rate as policies shift, slowing to 2.5 percent for 2022.
“The impact is being felt in Latin America through higher inflation that is affecting real incomes, especially of the most vulnerable. Policymakers are reacting to this challenge by tightening monetary policy and implementing measures to soften the blow on the most vulnerable and contain the risks of social unrest. But there are other risks looming. A possible escalation of the war could eventually lead to global financial distress and tighter financial conditions for the region.” IMF analysts note.
Brazil’s expansion will slow to 0.8 percent this year following last year’s growth of 4.6 percent. Mexico will decelerate to 2 percent. Colombia will likely post a lower deceleration with growth at 5.8 percent. Growth in Chile and Peru will be 1.5 percent and 3 percent, respectively, pointing to very significant reductions relative to their prior year’s double-digit rates.
Poverty and inequality remain key concerns as well given that the increase in inflation has an uneven impact on the population:
“The most vulnerable groups in the region are being hit hard by the increase in basic food and energy prices, while still struggling to recover from the economic impact of the pandemic.”