n n n ‘. concat(e. i18n. t(“search. voice. recognition_retry”),’n
By Natalia Siniawski
March 13 (Reuters) – The Organization for Economic Cooperation and Development said on Wednesday it expects the average structural balance in Latin America and the Caribbean to reach pre-pandemic levels through 2025.
Regions are expected to see a stable improvement between 2022 and 2025, with forecasts pointing to a return to -3. 4% of GDP forecast through 2025. This figure is in line with OECD countries’ projections and reflects the -3. 4% recorded in 2019.
The structural or underlying budget balance is the difference between government profits and expenditures, adjusted for effects that can be attributed to the business cycle and one-off events. The OECD uses it to provide a clearer view of governments’ fiscal positions.
The COVID pandemic exacerbated structural deficits in the Latin American and Caribbean (LAC) region and the OECD due to a decrease in government revenue and increased public spending.
As a result, the LAC region’s average structural balance deteriorated from -3. 4% of GDP forecast in 2019 to -4. 7% in 2022, while that of the OECD increased from -1. 38% to -3. 8% over the same period.
Forecasts suggest Suriname will lead the recovery with a 4.0 percentage point gain, followed by Colombia with 3.6 percentage points and Argentina with 2.9 percentage points. By 2025, only Suriname and Barbados are expected to post positive balances of 0.9% and 0.1% of potential GDP, respectively.
Major LAC economies, Argentina and Mexico, are predicted to better the LAC average by 2025, at -1.2% and -2.8% of potential GDP, respectively. However, Brazil is forecast at -5.4% of potential GDP.
LAC’s average structural balance for 2024 is projected to be -4. 6% of GDP, indicating a larger imbalance than the OECD average of -2. 7%. (Reporting by Natalia Siniawski; editing by Alison Williams)