Latin America’s Hard-to-Escape Stagnation Trap | Center For Global Development

Recent forecasts for economic growth around the world place Latin America as the developing region with the lowest growth rate, a dubious distinction it has earned in six of the last ten years. For example, the IMF and the World Bank forecast a meager rate of growth for Latin America in 2023—1.8 and 1.3 percent, respectively—with little improvement for 2024. Discouragingly, these poor outcomes coincide with a period of high commodity prices, which in the past have enhanced growth in the region. How concerned should we be by these numbers? Very, and not only because the latest figures are just one more data point in a persistent trend. The numbers are also worrisome because key fundamentals reveal that the region has fallen into a “stagnation trap,” meaning there are no convincing reasons to believe that faster growth is in the cards in the foreseeable future. Over the last decade, the region grew at an annual average rate of 1.23 percent. Even excluding the 2020-21 pandemic period, the

Recent forecasts for economic growth around the world place Latin America as the developing region with the lowest growth rate, a dubious distinction it has earned in six of the last ten years. For example, the IMF and the World Bank forecast a meager rate of growth for Latin America in 2023—1.8 and 1.3 percent, respectively—with little improvement for 2024. Discouragingly, these poor outcomes coincide with a period of high commodity prices, which in the past have enhanced growth in the region. How concerned should we be by these numbers? Very, and not only because the latest figures are just