By Rodrigo Campos
NEW YORK (Reuters) -The World Bank on Wednesday raised its growth estimate for the economies of Latin America and the Caribbean (LAC) to 2.0% from 1.4% in 2023 even as economic growth in the region remains the slowest in the world.
A World Bank spokesperson cited the region’s success in fighting inflation by moving early to tighten interest rates for the higher estimate.
“Lowering interest rates, as Brazil and Chile have started to do, will let Latin American countries grow faster during the rest of the year,” the spokesperson said.
The region’s debt-to-output ratio has fallen to 64% this year from 67% a year ago, but remains above the 57% reached in 2019, the Bank said in a report. With interest rates climbing in developed markets and growing expectations they will remain higher for some time, the ratio points to a growing cost of servicing that debt.
“High interest rates on the debt have made fiscal consolidation difficult,” William Maloney, the Bank’s Latin America and the Caribbean chief economist, said at a press conference.
“Most of our countries remain with substantial deficits.”
In its report, which focused on digital connectivity, the World Bank said the region lacked investment needed to reach its growth potential. It said increasing digital connectivity could help make the region more inclusive, with growth too slow at present to reduce poverty and create enough jobs.
Maloney cautioned that access to technology is not a “silver bullet” and should be accompanied by better and wider access to education.
“We find that digital literacy is much lower for instance in rural areas and poor areas, but also among women and girls,” Maloney said.
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