IMF lowers Latin America’s growth forecast for 2022

The International Monetary Fund (IMF) on Tuesday lowered the 2022 growth forecast for Latin America and the Caribbean due to inflation, tighter monetary policy and slower growth of the U.S. economy, reported Reuters.

According to the IMF’s growth projections, Latin American and the Caribbean will grow 2.4 percent, lowering the number by 0.6 percent from its October growth estimate of 3 percent.

In 2021, Latin America and the Caribbean grew 6.3 percent.

The IMF also cut its growth estimates for some of the region’s largest economies, including Mexico and Brazil, by 1.2 percentage points to 2.8 percent and 0.3 percent, respectively.

"The fight against inflation has prompted a strong monetary policy response, which will weigh on domestic demand," the IMF said of Mexico’s and Brazil's economic outlook.

Mexico’s slowdown is also affected by the slow growth of the U.S. economy, which will result in less demand for Mexican products.

The cut in Brazil’s growth forecast comes as prices of its commodity exports increase, such as iron ore.

Argentina is estimated to grow 3.0 percent, a 0.5 percent point increase from the IMF's previous estimates. The country and the IMF are negotiating to refinance some of Argentina’s debt.

Globally, the IMF cut the world economic growth from 4.9 percent to 4.4 percent in 2022, half a point less. Affecting the world’s economy is the inflation in the United States and the pandemic-induced disruptions in China.

In 2022, the US economy will grow by 5.3 percent, China will grow by 5.6 percent, and Europe by 4.3 percent.

"Growth is slowing as economies grapple with supply problems, high inflation, record debt, and persistent uncertainty," said the Fund's chief economist, Gita Gopinath.