IMF lowers growth projection for Latin America to 2.4% in 2022

The IMF cut its global growth forecast citing the impact of the omicron variant of the coronavirus.

The International Monetary Fund (IMF) on Tuesday lowered its economic growth projection for Latin America and the Caribbean this year, with sharp cuts for Brazil and Mexico, the region's two main economies.

The regional Gross Domestic Product (GDP) will expand 2.4% in 2022, 0.6 percentage points less than expected in October, the IMF said when updating its “World Economic Outlook” (WEO).

But Brazil's GDP will only grow 0.3%, and Mexico's, 2.8%, in both cases 1.2 percentage points less than the previous projection, he noted.

For Argentina, the third largest economy in Latin America and which has been negotiating for months the refinancing of a debt of 44 billion dollars with the IMF, the Fund foresees a growth of 3% in 2022, after a contraction of 9.9% in 2020 and an expansion of 10% in 2021.

The expansion of regional GDP in 2022 will be two percentage points less than that of global GDP, revised downwards to 4.4%.

The IMF cut its global growth forecast citing the impact of the omicron variant of the coronavirus, which contributed to an economic slowdown in the United States and China. And he said that this cut “also reflects revisions” in emerging markets such as Latin America.

In Brazil, “the fight against inflation has provoked a strong monetary policy response, which will weigh on domestic demand. A similar dynamic takes place in Mexico, although to a lesser extent,” the Fund noted in reference to the increases in interest rates by the central banks of the two countries.

“In addition, the reduction in the United States growth forecast brings with it the prospect of weaker than expected external demand from Mexico in 2022,” he added.

For next year, the IMF expects the GDP of Latin America and the Caribbean to grow 2.6%.