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.
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.
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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.
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.
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
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