By Rodrigo Campos

(Reuters) – The International Monetary Fund lowered Tuesday its 2022 economic growth predictions for Latin America and two of its largest economies. Key reasons for this downgrade were inflation, tighter monetary and a lower U.S. growth estimate.

IMF’s growth projections for Mexico, Brazil and Latin America were decreased by 1.2 percentage points to 2.8% each and 0.3% respectively. The estimate for Latin America was reduced by 0.6 percentage to 2.4%.

The IMF updated its World Economic Outlook to say that Brazil’s economic outlook is improving.

Gita Gopinath (First Deputy Managing Director) stated Tuesday at a press conference that Brazil is seeing a decrease in its outlook due to lower commodity export prices like iron ore. These were higher last year.

Inflation and higher rates will have an impact on Mexico, according to the Fund. The Fund also expects a decrease in output growth from America, Mexico’s largest trading partner.

The IMF stated that the U.S. economic growth downgrade could lead to weaker than expected external demand in Mexico for 2022.

Argentina’s growth is 3.0% in 2018, a 0.5% increase over the October IMF estimates. The 2.5% expected growth for 2023 is also 0.5 percent higher.

IMF and South America are currently in talks about a program that will refinance $41 billion Argentina’s debt.

Gopinath explained that they are taking a flexible, pragmatic approach. He hopes to make more progress in coming days.

The IMF projects that Latin America and Caribbean will grow at 2.6% per year in 2023. Brazil is expected to expand at 1.6%, and Mexico at 2.7%.