According to a World Bank report, Peru will grow by just 2.4% in 2023.

Economy Latin America And caribbean They have shown themselves relatively resilient in the face of rising debt pressures, inflation and global uncertainty, but new headwinds from falling commodity prices, rising interest rates in developed countries and a shaky recovery in China. could cloud the prospects for the region again.

This is confirmed by the report Regional integration belonging The World Bank, which predicts a 2.4% GDP growth outlook for Peru in 2023. In terms of regional GDP, it is projected to grow by 1.4% in 2023, lower than expected, and growth of 2.4% is expected in 2024 and 2025.

To spur the growth the region needs, the study notes, countries “must maintain hard-earned resilience and take advantage of the unique opportunities offered by global economic trends towards the near abroad and green industry.”

“The region has largely recovered from the pandemic crisis, but unfortunately it has returned to the low levels of growth of the previous decade,” said Carlos Felipe Jaramillo, Vice President The World Bank for Latin America and the Caribbean.

“Countries must urgently accelerate inclusive growth to ensure that development benefits all, and this will require maintaining macroeconomic stability and capitalizing on the opportunities that trade integration offers today,” he added.

Having recovered from the pandemic, the region has weathered multiple crises caused by the Russian war in Ukraine and the uncertainties surrounding the global economy with relative success. Both poverty and employment have largely returned to pre-pandemic levels, and average inflation, excluding Argentina, is expected to fall to 5% in 2023 after hitting 7.9% in 2022.

According to the report, the region’s overall resilience is the result of significant progress made in macroeconomic management over the past two decades. Maintaining this achievement will be paramount.

Consequences of fiscal imbalances

However, the study notes that fiscal imbalances remain high, estimated at 2.7% of GDP on average in 2023, further undermining an already tight fiscal space; debt levels are expected to reach 64.7% of GDP this year, slightly below the 66.3% reached in 2022. In addition, the recent bank failures in the US and Europe exacerbate uncertainties. Its implications for the banking system and capital flows in Latin America and the Caribbean is yet to be seen.

“The region remains one of the least integrated, while trade openness and international direct investment have largely stagnated or declined over the past 20 years; countries must find ways to increase attractiveness and take advantage of the trend of companies relocating,” William said. Maloney, World Bank Chief Economist for Latin America and the Caribbean.

“Furthermore, harnessing the region’s exceptional comparative advantage in sustainable production of energy, commodities needed for emerging green industries and its unique natural capital offers a potential new source of growth, but this will require policies that facilitate access to global markets, capital and technologies. ,” he added.

The report proposes a set of integration policies that countries should consider in order to take advantage of these opportunities. This includes long-term policies such as reducing systemic risks, increasing investment in traditional and digital infrastructure, and improving human capital; and short-term options such as maintaining macroeconomic stability, promoting progress in customs and transport regulation, and improving export and investment promotion agencies.