SANTIAGO, Chile (CMC) — The United Nations’ Economic Commission for Latin America and the Caribbean (ELAC) has forecast economic contraction for the region this year.

ECLAC said that economic activity in the region will contract -0.8 per cent this year, marking a steeper decline than in 2015 when the decline was -0.5 per cent.

ECLAC said there is an urgent need to mobilize investment – both public and private – to promote the region’s economic recovery and meet the challenges imposed by the 2030 Agenda for Sustainable Development.

Central America, the commission said, will grow 3.8 per cent, “thanks to the boost coming from its improved terms of trade, resulting from lower hydrocarbons prices; the recovery of its external and domestic demand; and increased income from remittances.

The Caribbean, meanwhile, will suffer a -0.3 per cent contraction in its Gross Domestic Product (GDP), ECLAC said.

According to the ECLAC’s report, six countries are expected to show an economic contraction in 2016, namely Venezuela (-8.0 per cent), Suriname (-4.0 per cent), Brazil (-3.5 per cent), Trinidad and Tobago (-2.5 per cent), Ecuador (-2.5 per cent) and Argentina (-1.5per cent).

On the other hand, ECLAC said regional growth will be led by the Dominican Republic (6.0 per cent), Panama (5.9 per cent), Nicaragua and Bolivia (4.5 per cent), and Costa Rica (4.3per cent).

“Faced with an economic contraction, the region needs progressive structural change with a big environmental push that promotes development based on equality and sustainability, as we have proposed in our institutional document  Horizons 2030: Equality at the Centre of Sustainable Development,  which we presented in Mexico last May,” said ECLACs Executive Secretary, Alicia Bárcena.

She said “the capacity of countries to accelerate economic growth depends on the spaces for adopting policies that support investment. These policies should be accompanied by efforts to change the conversation between the public sector and private companies. Increasing productivity is also a key challenge for moving forward along a path of dynamic and stable growth”.

The survey indicates that in the external arena, the global economy will maintain low levels of growth, which will be accompanied by a slow expansion in trade, “which has not managed to recover the levels seen before the international financial crisis”.

The report points to deteriorated prices for the region’s commodities exports and greater international financial uncertainty and volatility, “which have increased since the United Kingdom voted to leave the European Union, the so-called Brexit.”

“This decision has also produced greater risks to the world’s future growth,” ECLAC said.

In the regional sphere, the report forecasts a -2.1 per cent contraction for South America in 2016,mainly due to a deterioration in its terms of trade, weaker external demand and a significant deceleration in domestic demand, “which reflects a sizeable fall in domestic investment.”