SANTIAGO, Chile (CMC) — The Economic Commission for Latin America and the Caribbean (ECLAC) has revised slightly upwards the growth projection for the economies of Latin America and Caribbean (LAC) countries in 2024.

According to the new estimates, ECLAC forecasts that the region will grow by 2.1 per cent on average this year, with South America growing by 1.6 per cent, Central America and Mexico by 2.7 per cent, and the Caribbean, excluding Guyana, by 2.8 per cent.

It said that the region’s expected expansion in 2024 continues on the path of low economic growth observed in recent years and the major challenge is how to move towards higher, more dynamic and inclusive growth.

The United Nations (UN) commission says the region is facing a complex international scenario, characterised by growth in economic activity and global trade that is below their historical averages, along with interest rates that remain high in developed countries, resulting in greater financing costs for emerging countries, including those in the region.

It notes in the domestic arena, the downward trend in inflation has created space for various countries’ central banks to reduce their policy interest rates, generating expectations for a potentially favourable impact on economic activity.

ECLAC said in 2024, global markets will be marked by various risk factors.

Growing geopolitical tensions are leading the world towards a sharp realignment of value chains. In addition, there is a risk that increases in commodity prices could delay the reduction of policy interest rates by the main central banks, with negative effects on global economic growth.

Moreover, if interest rates remained high for more time, they could further increase the vulnerabilities linked to the debt burden that affects numerous emerging and developing economies, as well as the vulnerability of the financial sector in developed countries.

ECLAC had indicated previously that the low growth foreseen in 2024 is not just a circumstantial problem, but rather reflects a decline in the trend growth rate of regional gross domestic product (GDP).

It said the region is experiencing a development crisis characterised by three mutually reinforcing traps: a trap of low growth, a trap of high inequality and low social mobility, and a trap of low institutional capacity and ineffective governance. These traps constrain and limit the attainment of the United Nations’ 2030 Agenda and, therefore, the attainment of inclusive social development.

To invigorate growth, ECLAC has been insisting that the region must increase its productivity and boost investment in physical and human capital.

“To that end, the region must invest both more, and better. This involves adopting new technologies, promoting cluster initiatives and best business practices, fostering deep improvements in the process of capital accumulation, and taking suitable advantage of economies’ social and environmental capital,” ECLAC said.

ECLAC has also identified a portfolio of at least 15 driving or dynamising sectors for more sustainable and inclusive growth.

It said the region needs to invest in diverse areas that are critical for increasing productivity, infrastructure, telecommunications, digitalisation, research and development, significant improvements in health programs, and an adaptation of education systems to respond to the changes that digitalisation and automation entail for labour markets.