Latin America and the Caribbean continue to be weighed down by long standing stereotypes about their economies. The Economic Commission for Latin America and the Caribbean, known as ECLAC, reported this week that the region will face another challenging year. Despite the absence of direct clashes in areas like Ukraine, Russia, and China, growth remains slow and international trade stays constrained. The report links rising global interest rates and financial volatility at the start of March to this slower path. The region sits between mounting external uncertainty and internal constraints, with expected regional growth around 1.2 percent.
Even with a discouraging global tone, the picture shows only a few outliers. Argentina, Chile, and Haiti are the only Latin American economies projected to contract in 2023. ECLAC lowered Argentina’s GDP projection to a 2 percent decline for the year, versus the 1 percent growth forecast in the previous report. The IMF echoed this sentiment by signaling a tough year for Argentina, trimming its growth forecast from 2 percent to 0.2 percent.
Brazil appears as the slowest growing major economy within the region in 2023, with growth near 0.8 percent—slightly below the prior December forecast. Yet among multinational business circles, Brazil is still viewed as a potential investment destination, as protectionism raises the need for local industrial bases to access the market and pushes higher tariffs.
According to ECLAC, Colombia is expected to slow to about 1.2 percent GDP growth. Political protests in Peru and the economic volatility in Bolivia could dampen overall momentum, with some forecasts nudging growth down toward the 2 percent mark. Uruguay and Ecuador are forecast to maintain their trajectories, while Paraguay is expected to outpace its regional peers, rising to about 4.2 percent.
Mexico is projected to perform better than earlier expectations, with growth around 1.5 percent. The country remains a favored destination for Spanish investors and holds promising prospects alongside nearby Central American nations such as El Salvador, Costa Rica, and Panama, each of which is projected to grow at higher than expected rates, reaching roughly 2 percent, 2.7 percent, and 4.6 percent respectively.
As in other regions, restrictive policies have weighed on private consumption and investment. Inflation shows signs of easing during the year, but authorities face a narrow margin for maneuvering while public debt remains high. A core recommendation from ECLAC emphasizes safeguarding fiscal sustainability and expanding fiscal space by strengthening tax collection and policy driven redistribution.
The United Nations regional commission anticipates slower growth across all subregions in 2023 compared with 2022. South America is expected to grow about 0.6 percent in 2023 after 3.8 percent in 2022, Central America and Mexico about 2.0 percent versus 3.5 percent the prior year, and the Caribbean, excluding Guyana, around 3.5 percent compared with 5.8 percent in 2022.
South American economies face pressure from lower commodity prices and tighter domestic policy spaces. High inflation trims real income and dampens private consumption and investment. In the Caribbean, inflation bites into purchasing power and costs of production, reducing competitiveness in both goods and tourism exports.
For Central America and Mexico, overall growth is slowing compared with 2022, although some areas show improvements relative to late last year’s estimates. The United States remains the region’s major trading partner and a key source of remittances, and energy price improvements are likely to lift both the foreign sector and private consumption across the region.
All in all, the ECLAC outlook paints a cautious but not hopeless picture: inflation easing, some bright spots in Mexico and Central America, and a regional need to tighten fiscal policy where possible while supporting growth through targeted policies and investments. The overarching takeaway is a shared push toward stability and resilience in the face of global uncertainty.