The region grows, Argentina collapses. ECLAC report on the economic situation in Latin America

Argentina’s dire situation, isolated from a wave of almost normalized economic recovery, is news around the world. The Economic Commission for Latin America and the Caribbean (ECLAC) estimates that the region will grow by 2.1 percent this year, while local GDP will decline by a steeper 3.1 points.

Argentina lagged far behind in terms of economic recovery in relation to neighboring countries due to the adjustments implemented by the government of Javier Miley. For example, the ECLAC report projects that Brazil’s gross domestic product (GDP) will grow by 2.3 percent and Mexico’s by 2.5 percent. In this scenario, Argentina would fall 3.1 percent, still above the 2.8 percent decline projected by the International Monetary Fund (IMF). All this comes as ECLAC recalculated its regional forecast: in December, the organization projected an economic expansion of 1.9% for all countries.

When looking at local economy data, the agency’s estimate is interpreted and, in perspective, the figures predict, perhaps, an even greater decline in the economy. In the past few hours, INDEC reported that industrial production in March declined 21.2 percent year-on-year and an index measuring construction activity fell 42.2 percent over the same period. This has been accompanied by a significant decline in consumption, with sales in stores falling by an average of 16 percent.

Without industry and without bricks

Monthly records for both indicators also saw declines compared to the previous month: 6.3% in industry and 14.2% in construction, the report said. In terms of the industry, the cumulative figure for the first quarter of 2024 shows a decline of 14.8% compared to the same period last year.

If you look at it by regions, the decline is impressive. The largest declines in that period were in the production of furniture (-40.4%), machinery (-32.6%), automobiles (-24.7%), textiles (-22.9%) and food (-14,4%).

In terms of construction, one of the sectors having the biggest impact on the workforce, asphalt shipments in March declined by 69.2% year-on-year, iron shipments by -54.3% and cement shipments by -43.1%. There was a decline. Furthermore, the situation in private construction activity is complex. 53.3% of companies estimate that the level of activity in the sector will not change during the next three months, while 39% expect it to decrease due to the decline in economic activity and price volatility.

what is happening in the state

ECLAC’s work highlights that “the region faces a complex international landscape, in which economic activity growth and global trade remain below their historical averages, with interest rates in developed countries remaining high, leading to “This is resulting in higher financing costs for emerging countries”. And they say that “the lower growth expected in 2024 is not only a temporary problem, but reflects a decline in the trend growth rate of regional GDP.”

Other growing countries include Colombia, which will expand 1.3 percent this year, while Chile will expand 2.3 percent and Peru will expand 2.5 percent. Meanwhile, Venezuela will grow by 4 percent.

Among the risk factors, ECLAC listed rising geopolitical tensions and the threat that growth in basic products could delay interest rate cuts by central banks, which would hurt global economic expansion.