BETTER INTEGRATION
LAC has for years offered investors a rough environment of
rapidly changing rules, high transport costs and an unevenly
educated workforce, which means Canada, the United Kingdom and
sometimes the United States are more attractive than the
regional behemoths Brazil and Mexico.
These add to investor concerns over local costs of capital,
real estate and taxes, the World Bank said.
"The LAC region remains one of the least integrated, while
trade openness and (foreign direct investment) flows have mostly
been stagnant or decreasing over the past 20 years," said
William Maloney, chief economist for Latin America and the
Caribbean at the World Bank.
"Countries should find ways to gain attractiveness and take
advantage of the near-shoring trends," he said, while leveraging
the region's advantages in sustainable energy production and
green transition commodities.
(Reporting by Rodrigo Campos, editing by Ed Osmond)
NEW YORK, April 4 (Reuters) - Near-shoring and the green
economy offer opportunities to Latin America and the Caribbean
(LAC) that the region should seize, as current estimated
economic growth won't be enough to make a dent on poverty, the
World Bank said in a report on Tuesday.
The global lender said its forecasts for 2023 growth in the
region have been continuously downgraded over the last six
months and the estimate sits at 1.4%, with 2024 and 2025 seen at
2.4%, "too low to make significant progress in poverty
reduction".
"The region has largely recovered from the pandemic crisis
but unfortunately is back to the low growth levels of the
previous decade," said Carlos Felipe Jaramillo, World Bank vice
president for Latin America and the Caribbean.
"Countries need to urgently accelerate inclusive growth."
Two decades of progress in macroeconomic management have
given LAC an overall economic resilience, with the
debt-to-output ratio seen dipping to 64.7% of GDP from 66.3%
last year -though this is happening amid higher global financing
costs.
Poverty levels have fallen and employment risen to the point
where both are for the most part back to pre-pandemic levels.
Inflation, excluding Argentina, is expected to fall to 5.0% this
year from 7.9% in 2022.
But the region is also spending beyond its means and fiscal
imbalances are expected at 2.7% of output this year.
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