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Latin America accelerates but IMF warns of stagnant productivity

Increases in investment and trade drive growth in the region

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Latin America accelerates but IMF warns of stagnant productivity

The recovery in Latin America is reinforced. The International Monetary Fund projects an expansion of 2% for region this year, seven tenths more than in 2017 and one above what was projected three and six months ago. From re it will accelerate to 2.8% next year, in this case two tenths above prediction made in January and four above that of October. However, as fund warns, elections, envenjecimiento of population and stagnation of productivity are risk factors.

The gradual upturn in Latin America is explained by several factors. On one hand, it helps to make better-than-expected progress in both euro-zone countries, such as United States, China and Japan. The impulse also comes from rise in raw materials, as well as to increase in investment and especially to acceleration of global trade.

and also for ir own merits. Brazil, largest economy, begins to see recession through rearview mirror. The IMF projected 2.3% growth this year and 2.5% next. Not only does it represent a significant improvement over 1% of 2017, after contractions it recorded in 2015 and 2016. The new estimate represents an upward revision of four tenths against January.

Mexico, second most weight, will grow by 2% in 2017 to make it 2.3% in 2018 and rebound to 3% in 2019. In your case re are no changes compared to what was anticipated three months ago and that despite fact that two tenths of growth of its great trading partner, United States, is reviewed. The implementation of structural reform agenda is main support for growth.

Argentina, however, will experience moderation by lowering its growth to 2%, almost a point below that of 2017. It is explained, according to technicians, to effects of drought in agricultural production. It also cites fiscal and monetary adjustment to combat inflation and ensure sustainability of public finances. After this adjustment, it will take up 3.3% in medium term.

Colombia accelerates

As for Colombia, one of largest commodity exporting countries, growth will be 2.7% this year and 3.3% in 2019. Chile 's economy will expand at a rate of 3.3% over next two years. The one in Peru will make it 3.7% in 2018 and from re up to 4% in 2019. The highest rate of growth is that of Paraguay, of 4.5% and 4.1% respectively.

Despite improved perspectives, overall performance of Latin American economies is still halfway across global average, which is projected to be around 3.9% this year and next. For emerging and developing countries Group, IMF maintains growth rate by 4.9% for 2018 and which rebounds to 5.1% by 2019, for long-term stabilization by 5%.

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Venezuela is clear black spot. As IMF points out, it drags an economic and humanitarian crisis from 2014. The contraction will be 15% this year. He'll do it again 6% in 2019. But this moderation is not because problems dissipate. On contrary, adverse conditions intensify and organism anticipates that inflation will fire 13,865% this year and next one exceeds 12,800%. Unemployment will be 33%, compared to 27% in 2017.

Risks

And although in general terms news is positive, long is more sober. Medium-term growth will be moderated to 2.2% by weight of ageing and stagnation of productivity. That is why IMF insists that commodity-exporting countries diversify ir economies and adopt structural reforms that will enable m to be more resilient.

The IMF also reiterates need to adopt policies that promote more inclusive growth. It is this point that inequality in Latin America has declined since 2000, but "remains high." The agency also cites political uncertainty among factors that may have an effect on economy, along with risks such as corruption, climate change and migration.

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