Low Gear in Latin America

Isaac Cohen*

The International Monetary Fund released, last week in Lima, the report on the economic outlook for Latin America and the Caribbean. Regional economic activity “is expected to stay in low gear in 2014,” said Alejandro Werner, Director of the Western Hemisphere Department.

The Fund projects economic growth will decrease slightly in 2014, to 2.5 percent, from 2.7 in 2013. Slow growth is also projected to persist in 2015, with a slight improvement in the regional average to 3 percent. Therefore, the vigorous rates of growth of the last decade have come to an end.

However, behind the regional average rate of growth there are contrasting performances. For instance, some of the South American economies, which benefitted from the export boom of commodities to China, will grow less than the regional average of 2014. This is the case of Argentina, expected to grow 0.5 percent and Brazil 1.8 percent. By contrast, some mid-sized South American economies, such as Colombia, Ecuador, Paraguay and Peru, will grow over 4 percent in 2014. Venezuela is the only Latin American economy decreasing 0.5 percent this year and 1 percent in 2015.

Mexico and Central America will benefit from the expected stronger US economic recovery and are projected to grow this year slightly above the regional average, between 3 and 3.5 percent. Finally, the Fund characterizes growth in the English speaking Caribbean as tepid, at an average of 1.4 percent in 2014.

*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC. 

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