Latin America and the Caribbean: 2024 perspectives and its possible impacts on sustainable development

February 13, 2024

Javier Surasky
Director of Research

This year will present new windows of opportunity and obstacles to accelerating the Sustainable Development Goals (SDGs) in Latin America and the Caribbean (LAC). In this blog, we analyze some trends in the region for 2024 in each of the three dimensions of sustainable development. We also consider governance elements to help understand a challenging framework in which critical decisions must be made for the future.

In 2024, we will have presidential elections in six LAC countries. Polls indicate that the incumbent party would maintain the leadership in Mexico, where Claudia Sheinbaum could become the first woman president in its history; El Salvador would renew the mandate of Nayib Bukele despite doubts about the constitutionality of his new candidacy for office, in Uruguay and the Dominican Republic, where Luis Lacalle Pou and Luis Abinader will seek the renewal of their mandates, their administrations’ high levels of approval point to possible reelection.

At the other extreme, polls point to a likely defeat of the ruling party in Panama, where former president Ricardo Martinelli (2009-2014) leads in voting intentions despite having been convicted in 2023 for a corruption and money laundering case, a sentence that is in the process of being appealed.

In Venezuela -the only country on the list without a date for its electoral process- the controversies surrounding the government of Nicolás Maduro and the lack of transparency in information, added to the imprisonment of opposition leaders, prevent any analysis.

The escalation towards an armed confrontation with Guyana over the border region of the Essequibo, rich in oil, minerals, and gas, will have to be followed closely. After a long diplomatic and legal dispute, both countries experienced their last chapter in 2018, when Guyana, with the support of the current UN Secretary-General, went to the International Court of Justice to request the reaffirmation of the international arbitration that fixed the border between the two countries in 1899. Maduro’s government responded by ignoring the Court’s power to hear the case.

Then, in 2020, the court declared itself competent to hear the case but has not yet pronounced its final judgment. The Community of Latin American and Caribbean States (CELAC), almost absent from the regional political map in recent years, reappears to mediate between the two countries, the end of which is now uncertain.

All these processes are framed in a high level of citizen distrust towards the political sector, accompanied by weakened democracies, as reflected in The Economist’s Democracy Index 2022.

On the other hand, the arrival of Javier Milei, a political outsider, to the presidency of Argentina raises questions about its future regional positioning. It will have far-reaching regional effects with changes in alliances on sensitive issues, from support for regional environmental policies to redesigning the country’s insertion in international trade, with potentially significant impacts on the Southern Cone. 

All of the above, together with the low growth and economic difficulties described in the following section, pose challenges for accelerating regional trajectories of poverty reduction, fighting against labor informality and unemployment, and implementing public policies to promote equity and gender equality, among others. For these reasons, there will be more pressure on regional environmental resources, which could lead to new protests and social unrest.

Implementing actions to promote sustainable development requires financial resources. LAC has long been a low-priority region for international cooperation, and the inflow of foreign investment is limited, making it essential to generate our resources in the context of global economic restrictions.

The average projected growth for the region in 2024 is 1.5%, distributed by subregion as follows: the Caribbean (excluding Guyana, which is in a particular situation due to its recent entry into the “club” of oil-exporting countries), 2.8%; Central America and Mexico, 2.1%; and South America, 1.2%. As a result, employment growth is expected to slow down.

To recover it, countries in the region are moving towards flexible monetary policies that increase exports. For example, Brazil, Chile, and Peru reduced rates in the third quarter of 2023, and Colombia and Mexico are expected to do so in early 2024. Still, the slowdown in growth in countries such as the United States and China is resulting in lower demand for primary products, the main export of LAC countries, in international markets. In addition, there are deficiencies in infrastructure for the transportation of goods throughout the region, creating an obstacle to its export capacity.

The possible fall in demand for essential goods is accompanied by a forecast that their prices will continue to fall in 2024, except for energy commodities, which will increase pressure on the trade balances of LAC countries.

Growth perspectives for LAC countries: real GDP growth rates

In terms of minerals, the boost to the extractive industry could result in foreign exchange earnings in countries such as Argentina, Chile, and Bolivia (the lithium triangle). However, the uncertainty regarding the arrival of investments is due to doubts about economic and business policies in those countries and the growing public demand to regulate mining activities to reduce their environmental impact.

However, a boost to mineral processing activity to accompany its extraction could come from the global bidding between China, the United States, and the European Union, as the latter two seek to reduce China’s international weight in mineral processing.

Finally, it should be noted that the relocation of supply chains that followed the COVID-19 crisis will bring income to only a few LAC countries, such as Mexico and Panama.

Climate change is already being felt strongly in the region: the average temperature in LAC for 2021-2040 is expected to be about 1°C higher than in 1985-2014.

At the same time, LAC is essential to finding solutions to the challenges of climate change: it is home to 40% of the planet’s biodiversity and more than 25% of its forests. The region also plays a central role in the sustainable production of food and energy, where more than 30% of the energy production matrix is made up of “green energies,” a percentage that for some countries exceeds 90%, and an export profile that is closely linked to potentially polluting extractive activities.

Although it contributes less than 10% of global greenhouse gas emissions, LAC causes damage whose cost exceeds 2% of its combined annual GDP due to the worsening and greater recurrences of extreme weather and environmental catastrophes. The region is the second most vulnerable to natural disasters, which have affected approximately 190 million people since 2000.

Occurrence of extreme weather-related events and people affected in Latin America and the Caribbean (by type of event)

The expected climatic effects of the “El Niño” current in the region, with increases in rainfall in some sectors paired with droughts in others, will translate into differentiated opportunities and risks for different countries in the region in 2024. Argentina and Paraguay could benefit from more rainfall that benefits the crops, while Colombia and Central America will be exposed to droughts and the Caribbean to extreme weather effects.

It will be precisely the intensity of the climatic extremes reached by “El Niño” that will define its impact on the production of basic goods, energy generation, and transportation. Still, in any case, it could contribute to the inflationary pressures already present in LAC.

A vital issue for the region is what happens at the 28th Conference of the Parties to the United Nations Framework Treaty on Climate Change (COP 28), where the aim is to establish a “Loss and Damage Fund” to address the costs of climate change and increase funding for climate change mitigation. However, the region’s main concern will be the adoption of a new “global goal on adaptation to climate change” to guide and finance the actions required to adapt to the changes that climate change has already produced and to accompany the mitigation goal established in the Paris Agreement.

Defining this objective and creating channels to finance its achievement are two of the most complex issues at COP 28, and the outcome is uncertain. Chile and Australia have been designated as co-facilitators of this negotiation.

In parallel, what happens at the COP and the discussions on climate and financial issues that will take place in 2024 should find LAC as a leader around the Bridgetown Initiative, presented by Barbados in 2022, to modify the international financial system and urgently curb climate change, combining two concerns of deep regional significance.

By 2024, two countries in the region, Jamaica and the Dominican Republic, should adopt new national development strategies:

Brazil, for its part, will have its commission for the implementation and monitoring of the SDGs active again as of December 2023, after it was deactivated by the Jair Bolsonaro administration and replaced by the current government.

In addition, the following countries in the region will submit Voluntary National Reviews on implementing the SDGs: Argentina, Belize, Brazil, Colombia, Costa Rica, Ecuador, Honduras, and Peru. It is possible, however, that the position of the recently elected president of Argentina, Javier Milei, against the 2030 Agenda will lead the country to withdraw its offer.

On the other hand, in 2024, the seventh forum of Latin American and Caribbean countries will be held in the city of Santiago de Chile, a meeting that will be of special importance for the region given that it will not only serve as it traditionally does, as a regional preparatory meeting for the follow-up and evaluation process of the 2030 Agenda that concludes at the United Nations High-Level Political Forum but will also be a key moment in the regional path towards the Summit of the Future, which will meet in New York in September 2024.

It is important to keep in mind that the coming year will find LAC countries and officials occupying positions of high capacity to influence global debates on the future of multilateralism:

In addition, there is growing activity regarding appointing the person who will succeed the current Secretary General of the United Nations. Following the practice of geographic rotation in exercising this responsibility, a person from LAC should occupy the position. However, Eastern Europe had pointed out that, in its opinion, its turn was “skipped,” given that it was entitled to the organization’s secretary general when Guterres, from Western Europe, was appointed for his first term.

If the LAC position prevails over that of Eastern Europe, we may see in 2024 the first bids to position male and female candidates. There was pressure to ensure that, for the first time in history, a woman who heads the UN was scorned when the current Secretary-General was chosen, but it is unlikely that the same thing will happen again.

Although it is too early to advance names, the current Prime Minister of Barbados, Mia Amor Mottley, appears as an inescapable reference, although several candidates are in the running.

World Bank (2023). Conectados: Tecnologías digitales para la inclusión y el crecimiento. Banco Mundial: Washington. 

Development Bank of Latin America and the Caribbean. Economic and Development Report (RED) 2023.  Desafíos globales, soluciones regionales: América Latina y el Caribe frente a la crisis climática y de biodiversidad. Development Bank of Latin America and the Caribbean.

ECLAC (2023). Perspectivas del Comercio Internacional de América Latina y el Caribe 2023. Santiago: ECLAC

ECLAC (2023). Estudio Económico de América Latina y el Caribe 2023. Santiago: ECLAC

ECLAC (2023). Institucionalidad social en América Latina y el Caribe. Eje central para avanzar hacia un desarrollo social inclusivo. Regional Conference on Social Development. Santiago, ECLAC.

Cepei (2023). Desarrollo Sostenible: hitos de 2023 y una guía para 2024. Cepei: Bogota. 

CCG-UC (2023). Documento de trabajo sobre las bases físicas del cambio climático e indicadores del cambio climático en América Latina y el Caribe. Center for Global Change of the Pontificia Universidad Católica de Chile. Santiago: UC.

The Economist Intelligence Unit (2023) Latin America outlook 2024. Political risk persists, but investment opportunities surge. The Economist. 

The Economist Intelligence Unit (2023) Democracy Index 2022. Frontline Democracy and the Battle for Ukraine. The Economist. 

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