ECLAC predicts 2.2% growth for Latin America, Caribbean

ECLAC predicts 2.2% growth for Latin America, Caribbean

Friday, December 05, 2014

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SANTIAGO, Chile (CMC) — The Economic Commission for Latin America and the Caribbean (ECLAC) is predicting that economic growth in Latin America and the Caribbean will reach an average 2.2 per cent in 2015.

ECLAC said, "This moderate rise will take place in the context of the global economy's slow and heterogeneous recovery, with downward pressure on commodity prices and little dynamism in the region's external demand, as well as an increase in financial uncertainty."

It said the evolution of the global economy will have different impacts among countries and sub-regions in 2015, as it did throughout 2014, and that Central America as well as Haiti and the Spanish-speaking Caribbean are expected to grow at a rate of 4.1 per cent, South America at 1.8 per cent, and the English-speaking Caribbean at 2.2 per cent.

In 2014, average regional growth was just 1.1 per cent, marking the smallest expansion since 2009, ECLAC said.

"The region's performance shows great heterogeneity among countries and sub-regions," it said, stating that Central America, Haiti and the Spanish-speaking Caribbean grew 3.7 per cent, South America 0.7 per cent, and the English-speaking Caribbean 1.9 per cent.

In fiscal terms, ECLAC said Latin America will register a slight increase in its deficit to 2.7 per cent of GDP in 2014 from 2.4 per cent in 2013; while the Caribbean will reduce its deficit to 3.9 per cent in 2014 from 4.1 per cent last year.

In addition, the public debt of the region's countries will remain at low and stable levels, averaging around 32 per cent of GDP, ECLAC said.

Meanwhile, ECLAC said accumulated regional inflation in the 12 months to October was 9.4 per cent on average, with a very diverse performance among countries.

It also said the urban open unemployment rate will register a "fresh decline" to six per cent from 6.2 per cent the previous year, despite the weak job creation resulting from low economic growth.

"The deceleration in investment observed since 2011, and which showed a roughly 3.5 per cent contraction during 2014, is an important factor in the decline of the GDP growth rate," ECLAC said.

"To invigorate economic growth and stop deceleration in the global economy's current context entails significant challenges for the region," said ECLAC's Executive Secretary Alicia Bárcena.

"Among these, it is necessary to revive domestic demand prioritising the dynamic of investment. This should impact positively on the economies' productivity and competitiveness," she added.

To that effect, ECLAC proposes expanding the countercyclical macroeconomic architecture to incorporate mechanisms that protect investment financing, particularly that of infrastructure, through the different phases of the cycle.

At the same time, ECLAC urged that regional integration "play a leading role in increasing regional aggregate demand, supporting progress on productivity by including companies in regional value chains, and strengthening the region's ability to handle external shocks through financial integration".

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