New forecast from the World Bank for Latin America and the Caribbean

The World Bank has published its report titled "Competition: The Missing Ingredient for Growth?", which includes assessments of the Latin American and Caribbean economies.

The report states that the region has reached a critical juncture, emphasizing that despite significant progress in economic stability in recent years, the loss of growth momentum is undermining progress and that urgent action is needed to reverse the situation.

Noting that the region's economic growth is expected to be 1.6 percent in 2024, 2.7 percent in 2025, and 2.6 percent in 2026, the report assessed: "These rates are the lowest compared to all other regions in the world and are insufficient to increase prosperity. Many households are under pressure due to declining social transfers and wages that have not yet reached pre-pandemic levels."

The report stated that factors driving the growth figures include low levels of investment and domestic consumption, high interest rates and high fiscal deficits, falling commodity prices, and uncertainty in the expectations of key partners such as the US, China, Europe, and other G7 countries.

REFORMS ARE CRITICAL

Pointing out that inflation management, which reflects the sound macroeconomic reforms pursued in the region for decades, is a bright spot, the report noted that regional inflation, excluding Argentina and Venezuela, is at 3.5 percent.

The report stated that inflation expectations in most of the region remain anchored and that central bank targets are expected to be met in 2024.

Underlining that Latin America and the Caribbean must address long-standing challenges to capitalize on this progress and revitalize their economies, the report stated that reforms in infrastructure, education, and trade are critical for increasing productivity and global integration.

EMPHASIS ON BETTER COMPETITION

Drawing attention to the importance of promoting competition to stimulate the economy and regain investor confidence, the report stated: "When competition is supported by sound policies, institutions, and personnel, companies innovate, become more efficient, and achieve technological breakthroughs. Consumers are better off thanks to lower prices and more choices. This is an urgent issue in Latin America and the Caribbean."

Noting that the low level of competition in the region undermines innovation and productivity, the report offered recommendations to improve competition frameworks and enhance the region's position in the global market.

Actions recommended in this context include strengthening competition authorities, supporting innovation policies, and increasing managerial skills.