Evolution of GDP in Latin America

presents a negative contribution to output growth, due to the sharp increase in imports.”

According to ECLAC, “from a sectoral perspective, the expansion of economic activity was led by the recovery of the sectors of economic activity most affected by the pandemic (construction, commerce, manufacturing, and transport and communications), all of which showed a generalized increase. The rest of the sectors of economic activity also recorded recoveries during the second quarter”.

GDP evolution in Latin America

In this context, the projected growth of the world economy for 2021 was 5.8 % and, for 2022, a slowdown to 4.9 % is expected. In the cases of the United States and China, substantially lower growth rates are expected in 2022 than those observed in 2021.

According to the Economic Commission for Latin America and the Caribbean, “the group of developed economies would have grown by 5.2% in 2021. The United States is estimated to have grown by 6.0% and the euro zone by 5.2%, while Japan is estimated to have grown by 2.4% and the United Kingdom by around 6.8%. In the group of emerging and developing economies estimated to have grown by 6.4 % this year, China, with a growth of 8.0 %, and India, with 9.5 % stand out”.

From another point, and in a less optimistic scenario, the negative developments since the release of the October 2021 WEO report mean that the world economy is starting the year in weaker conditions than expected.

Supply disruptions continued during the fourth quarter, sowing obstacles for international manufacturing, particularly in the United States and Europe. A resurgence of COVID cases (particularly in Europe) also hinders a broader recovery. In China, disruptions caused by COVID outbreaks, disruptions to industrial production caused by power outages, falling real estate investment and the unanticipated acceleration of public investment retrenchment contributed to a cooling of the economy in the second half of the year.

In sectoral terms, ECLAC states that although the current economic situation has had a negative impact on all sectors, it has done so with varying intensity depending on the sector. The most affected were manufacturing, construction, commerce and transportation, and the least affected were agriculture, essential services, financial services and mining.

The analysis presented by ECLAC at the country level indicates that Chile and Brazil are the most indebted economies in the region (263% and 229% of GDP for the third quarter of 2020, respectively).

This is why liquidity expansion policies have succeeded in lowering the cost of financing for the nonfinancial corporate sector. The interest rate spread for the corporate sector has narrowed substantially since the beginning of the pandemic for high yield and investment grade bonds.

Selected regions and countries GDP growth rate for 2020 and projections for 2021 and 2022 (In percentages)

13

8

3 5,8 4,9 5,2 4,2 6,0

3,9 2,4 3,0 6,8

5,0 5,2 4,6 6,4

5,1 7,2

6,4 8,0

5,7

2,3 9,5

7,9

5,9 3,8 4,1 4,1 3,7 3,8

-2

-7 3,1

-12

World Advanced economies United States Japan United Kingdom Euro zone Emerging and developing economies Emerging and developing countries in Asia China India Emerging and developing countries in Europe Middle East and North Africa Sub-saharan Africa

-4,5 -3,4

-4,7

-9,7 -6,3 -2,1 -0,8

2020 2021 2022 -7,3 -2,0 -2,8 -1,7

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Organization for Economic Cooperation and Development (OECD), OECD Economic Outlook, Interim Report, Keeping the Recovery on Track, September 2021; International Monetary Fund (IMF), World Economic Outlook (WEO), October 2021; European Central Bank (ECB), “Eurosystem staff macroeconomic projections”, September 2021 and Capital Economics. a Figures for India are for the fiscal year, beginning in April and ending in March of the following year.