New estimates released on Wednesday by the Economic Commission for Latin America and the Caribbean (ECLAC) predict an average growth rate of 1.8% for the region. This is where the conflict in Ukraine has caused inflation, financial volatility and costs to increase.
This year, St Vincent and the Grenadines is expected to grow by an estimated 2.7%.
The World Bank had projected an 8.3 percent economic growth for St Vincent and the Grenadines in January 2022, however, those figures were revised downwards in March.
Mario Cimoli, the organization’s acting executive secretary, announced the new figures to the ambassadors of Latin American and Caribbean countries at the United Nations headquarters on Wednesday.
A decrease in foreign demand is also expected in Latin America and the Caribbean as a result of the conflict in Ukraine, according to ECLAC. There will be lower growth rates in the region’s main trading partners, including the United States (US), China, and the European Union (EU).
Growth in the US is expected to be 2.8% (1.2 points lower than previous projections). China’s growth is projected at 5% (0.7 percentage points less than before the hostilities) and the EU’s growth is estimated at 2.8% (1.4 percentage points less than pre-conflict projections).
The war in Ukraine has also caused a rise in commodity prices, mainly for fossil fuels, some metals, food and fertilizers. As a result of disruptions in supply chains and exacerbated interruptions in maritime transport, this price increase is in addition to the previously mentioned increases in costs. As a result of these price hikes, world inflation rates have increased, reaching historic highs in some countries by 2022. In developed countries, higher interest rates are likely due to persistent and increasing inflation.
As macroeconomic conditions change and financing costs increase, the decline in fiscal momentum is expected to accelerate in 2022. This will reinforce the decline observed in 2021 and reduce fiscal policy’s contribution to growth.
