According to the International Monetary Fund (IMF), Ecuador will have the lowest annual inflation rate in Latin America and the Caribbean in 2023, said reports.

It is demonstrated by the multilateral organization's Economic Outlook report, which will be presented on Nov. 1, 2022.

According to the IMF, Ecuador's average inflation rate in 2023 will be 1.4%, lower than the 3.8% forecast for 2022.

Ecuador's indicator will be significantly lower than the Latin American average, where the IMF predicts 9.5% inflation in 2023.

Following Ecuador, El Salvador, another dollarized economy, will have the lowest inflation in the region.

According to the IMF, El Salvador's average inflation rate in 2023 will be 2%. The figure is lower than the 6% rate predicted for 2022.

Meanwhile, Venezuela, with an average inflation rate of 150%, will have the highest indicator in 2023.

Argentina is next, with a 60% inflation rate.

The drastic fall in the prices of raw materials and social unrest due to the rising prices of products are the two risks that persist in the region, says the IMF.

With inflation still unabated, governments must avoid “premature easing of monetary policy,” the IMF said.

The body recommends that governments implement compensatory measures to help the population groups with the lowest income and most vulnerable.

According to the report, countries must maintain fiscal consolidation as conditions to access loans tighten.

This refers to preventing a state's expenses from exceeding its income to unsustainable levels.

The IMF believes that governments should encourage more public and private investment to boost the economy.

“Policies should focus on simplifying and modernizing labor regulations and removing barriers that make it difficult for businesses to enter and exit,” the report says.

Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook.

Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023. This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic.

Representation image. Photo by Sharon McCutcheon on Unsplash

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