Latin America and the Caribbean (LAC) find themselves at a pivotal moment as economic growth stagnates, posing significant challenges to the region's development. The World Bank's latest report, titled "Competition: The Missing Ingredient for Growth?" underscores the urgency for decisive measures to reverse the downward trend.
According to the report, LAC is forecasted to experience a modest GDP expansion of 1.6 percent in 2024, with growth rates of 2.7 and 2.6 percent projected for 2025 and 2026 respectively. These rates, the lowest among all global regions, are deemed insufficient to drive prosperity. Declining social transfers and stagnant wages further exacerbate the economic strain on many households. World Bank Vice President for Latin America and the Caribbean, Carlos Felipe Jaramillo, emphasized the profound consequences of persistent low growth, stating that it impedes development by limiting public services, job opportunities, and exacerbating poverty and inequality. Factors contributing to the sluggish growth include low investment levels, subdued domestic consumption, high interest rates, fiscal deficits, declining commodity prices, and uncertainties regarding major trading partners such as the U.S., China, Europe, and other G7 countries. Additionally, potential global disruptions, such as geopolitical tensions and shipping disruptions, could further dampen economic prospects. Despite the challenges, the region has managed inflation effectively, boasting a regional rate of 3.5% (excluding Argentina and Venezuela), compared to 5.7% in OECD countries.
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