When the head of the U.N. Economic Commission for Latin America and the Caribbean (ECLAC) announced new projections that the region will grow at a meager 1.7% this year, and an even more depressing 1.5% next year, many analysts interpreted it as a temporary downward cycle. After all, the region has a long history of periodic ups and downs.
But what I found most surprising in an extended interview with ECLAC’s executive director José Manuel Salazar-Xirinachs is that he fears that Latin America may suffer from a long-term “low growth disease.” Unless countries in the region seriously focus on productive growth, this “disease” may soon result in greater political upheaval, violence and migration crises, he told me.
According to ECLAC’s forecast, Argentina and Chile’s economies will shrink by 3% and 0.3% respectively this year. Mexico’s economy is expected to grow by 2.9%, Brazil’s by 2.5%, Peru’s by 1.3% and Colombia’s by 1.2%.
For the next year, most countries will have equally mediocre or lower growth rates. Mexico’s economy, for instance, is projected to grow by only 1.8% in 2024.
Only Central American and Caribbean countries are doing reasonably well, largely because of their close trade links to the United States. Panama will grow by 5.1% this year, Costa Rica by 3.8%, and the Dominican Republic by 3.7%.
But, overall, the outlook for Latin America and the Caribbean is grim, because, among other things, China’s economic downturn will hurt the region’s exports.
Latin America’s unemployment will grow from 6.8% in 2023 to 7.1% in 2024, ECLAC says.
“If we’re not able to raise growth to 3% or 4% annual rates, this low growth disease will bring along other diseases,” Salazar-Xirinachs told me. “We’re going to see a decline of social peace, we will become increasingly unequal and violent societies, and we will see millions of more people emigrating.”
Like most economists, Salazar-Xirinachs is urging Latin American countries to diversify their exports, so that they doesn’t rely so heavily on sales of oil, soybeans, copper and other raw materials. In the age of ChatGPT and the knowledge economy, sophisticated manufactured goods and services are much more lucrative than traditional commodity exports.
When I asked him what’s the one thing that worries him most, he said, “It would be a poor or highly polarized public debate” that doesn’t address the region’s urgent needs to improve education and healthcare, and address climate change.
I couldn’t agree more. In my recent travels to the region, and watching the media in Mexico, Argentina, Colombia and other countries daily, it’s hard to find any serious national debates about quality education, technology and other issues that will make or break these countries’ future.
A new study on the state of artificial intelligence in Latin America paints an alarming picture for the region’s future, but got little coverage in the media, or attention from top officials.
The Latin American Artificial Intelligence Index, known by its Spanish acronym ILIA and researched by 12 scientific institutions, says that only 2.2% of Latin America’s labor force has skills directly or indirectly related to artificial intelligence, while the world average is of 3.6%.
What’s just as alarming, the total private investment in artificial intelligence-related projects in Latin America amounts to 1.7% of the total figure in the United States and 5% of that of China’s, the study says.
“Artificial intelligence is going to be as omnipresent in our lives as electricity, or the internet,” ILIA’s executive director Rodrigo Durán Rojas told me. “If we don’t get up to speed, we will be left farther behind.
In short, Latin America can no longer expect to grow thanks to China’s appetite for its raw materials. It will have to start doing what it should have begun doing years ago, and invest in quality education, technology and innovation. And the first step should be putting these issues front and center of each country’s public debate.
Don’t miss the “Oppenheimer Presenta” TV show on Sundays at 9 pm E.T. on CNN en Español. Blog: www.andresoppenheimer.com