The projection slightly exceeds the estimates released last June, of 1.8%, according to the report 'Taxes on wealth for equity and growth' by the multilateral organization, published this Wednesday.
Latin America will grow by 1.9% in 2024, slightly exceeding the estimates released last June of 1.8%, according to the World Bank's report 'Wealth Taxes for Equity and Growth', published this Wednesday.
In 2025, the region is projected to grow by 2.6%. These are the lowest rates among all regions in the world, highlighting persistent structural bottlenecks.
To accelerate growth, the region must build on the current momentum, the international organisation said. The US Federal Reserve's decision to cut interest rates is expected to provide some relief.
Controlling inflation is another positive development, thanks to effective macroeconomic management in the region. Brazil and Peru are on track to meet their inflation targets by 2024, with other major economies expected to follow suit soon after.
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The report highlights that both public and private investment in Latin America remains low and that the region is not taking full advantage of nearshoring opportunities.
Foreign direct investment (FDI) levels are lower than they were 13 years ago in real terms, and investment announcements in new areas favour other regions. Despite competitive wages compared with China and other destinations, high capital costs, weak education systems, poor energy and infrastructure, and social instability reduce the region's attractiveness as a nearshoring destination.
"The region has made progress in managing inflation and stabilizing its macroeconomic environment. This is a crucial moment to build on these achievements in order to attract the investments needed for sustainable development and empower the region to emerge from this cycle of low growth," said Carlos Felipe Jaramillo, World Bank Vice President for Latin America and the Caribbean.
To take advantage of Latin America's large windows of opportunity, the green transition and the nearshoring movement, structural reforms are needed across the board to make the region more productive and competitive. This will require creating more fiscal space, improving government effectiveness and reducing the tax burden on productive sectors.
