Latin American Recess

By Isaac Cohen*

Latin America is undergoing, since 2014, another fall in its economic performance, caused by the end of the boom generated by the commodity price super cycle. The International Monetary Fund has reviewed downwards this year’s regional growth projection to 0.2 percent, down from 1 percent in 2018. The average rate of growth for the Latin American region, since 2014, has remained under 1 percent.
However, it is necessary to look at what is behind the fall in commodity prices, to find out if a turnaround can still come from the same source. Less demand for commodities was mainly caused by the slowdown in China’s economy, which has hurt commodity exporters, particularly those South American economies for which China has become the main export market, such as Chile, Peru and even Brazil. Chinese almost insatiable demand for commodities resulted from spectacular two digit growth rates, sustained by robust stimulus packages, when the Chinese economy started slowing down. The difference is that, this time, there does not seem to be a disposition to stimulate the Chinese economy, which means that the recovery in Latin America will have to come from other sources.
The International Monetary Fund projects Latin America’s growth rate will increase in 2020 to 1.8 percent, based on “domestic sources of growth,” because external factors “remain a headwind to economic prospects in the region.” https://www.imf.org/en/Publications/REO/WH/Issues/2019/10/22/wreo1019?cid=em-COM-123-39628

*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.

About Ramón Jiménez

Ramón Jiménez, Managing Editor de MetroLatinoUSA.Com (MLN). Graduado de la Escuela de Periodismo de la Universidad del Distrito de Columbia (UDC). Email: [email protected]

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