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World Bank’s Latin America Growth Forecast Jumps

The World Bank’s forecast for growth in Latin America and the Caribbean in 2021 has jumped by more than one-fifth compared to predictions made just four months ago. The revised Latin America growth forecast is the latest indication of the region’s positive economic outlook following the turmoil of the global pandemic.

Buenos Aires the capital of Argentina which is expected to see significant growth according to the World Banks new Latin America growth forecast
Buenos Aires, the capital of Argentina

According to “Recovering Growth” (pdf), the World Bank’s semi-annual report on Latin America and the Caribbean, the organization has upgraded the region’s expected gross domestic product (GDP) growth for the year to 6.3%, having suggested it would be 5.2% in an analysis released in June (pdf).

That will see the region almost recover the 6.7% GDP loss seen during 2020 due to the COVID-19 pandemic, while the report suggests that its new Latin America growth forecast may yet prove conservative.

“Given the robust recoveries in their principal trading partners, low global borrowing rates, and the prospect of another commodity super cycle, growth rates might be expected to be 1.5 percentage points higher,” states the report, which was released on 6 October.  

The strongest performers according to the new Latin America growth forecast are Chile, Guyana, and Peru, which are all predicted to experience double-digit growth in 2021, while Belize, the Dominican Republic, El Salvador, and Panama are all expected to witness at least 8% GDP growth.

SEE ALSO: How to Register a Business in Chile

Although Guyana is the strongest performer, with predicted GDP growth of 21.2% this year, it is also the only country whose 2021 figure represents a decline on the previous year, with 2020 growth registered at a staggering 43.5% and expected to exceed that figure in 2022.

Every other country surveyed experienced a GDP decline in 2020, with the new predictions highlighting how many of the region’s economies are set to recover.

The World Bank’s revised Latin America growth forecast echoes an upgraded prediction published last month by the UN’s Economic Commission for Latin America and the Caribbean (ECLAC), offering encouraging signs to foreign investors about the potential for the region.

A graph showing the latest Latin America growth forecast figures from the World Bank
Many of the region’s economies are set to bounce back in 2021

Latin America growth forecast: five of the biggest bounce backs 

The World Bank’s new Latin America growth forecast for 2021 highlights how many of the economies from the region are expected to see GDP growth bounce, with nine countries set to witness growth that will exceed declines suffered during the worst period of global health emergency, in 2020.

Among the most significant recoveries are those of Argentina, Belize, Chile, Panama, and Peru, where turnarounds of at least 16% will be seen. In Colombia, the Dominican Republic, El Salvador, Honduras and Mexico, meanwhile, double-digit turnarounds will also be seen.

According to the new Latin America growth forecast, Argentina will witness a 17.4% GDP turnaround, with growth for this year set to reach 7.5%, following a decline of 9.9% in 2020.

Notably, while employment figures are not expected to recover to pre-pandemic levels, Argentina is set to witness one of the greatest recoveries in the region, as the economy bounces back.

The Central American nation of Belize is set to witness a turnaround only exceeded by that of Panama, with 9% predicted GDP growth for this year following a decline of 14% in 2020. 

As the report highlights, Belize has one of the best scores for “resolving insolvency” from the region, as noted in the World Bank’s own Doing Business 2020 report — something that contributes to recovery, offering more opportunity for recovery to firms left stricken by the crisis.

Santiago the capital of Chile which is expected to see significant growth according to the World Banks new Latin America growth forecast
Santiago, the capital of Chile

Chile went into the global health emergency on the back of a rare period of social unrest, which had contributed to constricted growth in 2019. Following the onset of the pandemic, the country witnessed a GDP decline of 5.8% in 2020.

However, according to the new Latin America growth forecast, GDP is expected to grow 10.6% in 2021, representing a bounce of 16.4%, with Chile’s well-publicized rapid dispensation of vaccines to its population a significant contributing factor to its recovery success.

Having seen its GDP plummet 17.9% during 2020, Panama’s predicted GDP growth of 9.9% in 2021 will not see it overcome the losses made last year, but will still represent a significant recovery.

As the report highlights, in implementing measures to boost recovery, Panama is expected to keep its public debt to GDP ratio below the regional average in 2021, even despite it being above average prior to the crisis.

According to the World Bank’s new Latin America growth forecast, Peru’s predicted GDP growth of 11.3% in 2021 will see it effectively overcome the 11.1% decline seen in 2020 and represent a turnaround of 22.3% — the third-largest in the region.

These results come despite widespread fears about the future of the economy following the election earlier this year of leftist President Pedro Castillo, whose economic approach has been considerably more moderate than many analysts feared prior to the poll 

Biz Latin Hub can assist you in doing business in Latin America.

At Biz Latin Hub, we provide tailored packages of integrated back-office services to investors and corporations entering and doing business in Latin America and the Caribbean.

Our portfolio of services includes company formation, accounting & taxation, legal services, visa processing, and hiring & PEO, which we offer in the 16 countries around the region where we have local teams in place. 

We also have trusted partners in other markets, meaning that anywhere you may wish to do business in Latin America and the Caribbean, we can guarantee you get the support you need.

With the new Latin America growth forecast from the World Bank highlighting the improved economic outlook for the region, the time is right for seeking out new opportunities.

Contact us today to find out more about how we can assist you.

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Key services offered by BLH including legal services, accounting & taxation, hiring & PEO, due diligence, tax advisory, and visa processing
Key services offered by Biz Latin Hub

The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.
Craig Dempsey
Craig Dempsey

Craig is a seasoned business professional in Latin America. He is the Managing Director and Co-Founder of the Biz Latin Hub Group that specializes in the provision market entry and back office services. Craig holds a degree in Mechanical Engineering, with honors and a Master's Degree in Project Management from the University of New South Wales. Craig is also an active board member on the Australian Colombian Business Council, and likewise also active with the Australian Latin American Business Council.

Craig is also a military veteran, having served in the Australian military on numerous overseas missions and also a former mining executive with experience in various overseas jurisdictions, including, Canada, Australia, Peru and Colombia.

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