The World Bank published its report titled “Competition: The Missing Component of Growth?”, which includes evaluations on the economies of Latin America and the Caribbean.
The report noted that the region has reached a critical juncture, emphasizing that while significant progress has been made in economic stability in recent years, slowing growth is undermining progress and urgent action is needed to reverse the situation.
Noting that the region’s economic growth is expected to be 1.6 percent in 2024, 2.7 percent in 2025 and 2.6 percent in 2026, the report said: “These rates are the lowest compared to all other regions in the world and are insufficient to increase prosperity. Many households are under pressure as social transfers have decreased and wages have not yet reached pre-pandemic figures.”
The report said the factors driving growth figures included low levels of investment and domestic consumption, high interest rates and high fiscal deficits, falling commodity prices and uncertainty in the prospects of key partners such as the US, China, Europe and other G7 countries.
Reforms are critical
The report pointed out that inflation management, reflecting decades of sound macroeconomic reforms in the region, is a bright spot, with regional inflation at 3.5 percent, excluding Argentina and Venezuela.
Inflation expectations in most of the region remain stable and central bank targets are expected to be reached in 2024, the report said.
To capitalize on this progress and revitalize economies, Latin America and the Caribbean must address long-standing challenges, the report underlined, adding that reforms in infrastructure, education and trade are critical to boosting productivity and global integration.
Emphasis on better competition policies
The report highlights the importance of promoting competition to revitalize the economy and restore investor confidence: “When competition is supported by sound policies, institutions and staffing, companies innovate, become more efficient and make technological breakthroughs. Consumers are better off with lower prices and more choice. This is an urgent issue in Latin America and the Caribbean.”
The report, which notes that low levels of competitiveness in the region undermine innovation and productivity, makes recommendations to improve competitive frameworks and enhance the region’s position in the global market.
The report recommends actions such as strengthening competition institutions, supporting innovation policies and enhancing managerial skills.
