Despite a weakened global economic growth, outlook projected by the United Nations World Economic Situation and Prospects (WESP) mid-2019 report, which was released yesterday in New York, suggests that growth in Latin America and the Caribbean is expected to slowly increase. However, risks remain tilted to the downside due to external and domestic factors.

The report reveals that the global economy is experiencing a broad-based growth slowdown amid unresolved trade tensions, high international policy uncertainty, and softening business confidence.

The projection casts a shadow over efforts to implement the 2030 Agenda for Sustainable Development, which has set universal goals for eliminating poverty, and promoting prosperity and social well-being while protecting the environment. Weaker economic growth puts at risk essential investments in areas such as education, health, climate change adaptation, and sustainable infrastructure.

According to the report, the growth outlook in all major developed economies and most developing regions has weakened due to a confluence of both domestic and external factors. Following an expansion of 3.0 per cent in 2018, world gross product growth is now projected to moderate to 2.7 per cent in 2019 and 2.9 per cent in 2020, reflecting a downward revision from the forecasts released in January.

In Latin America and the Caribbean, GDP is projected to expand by only 1.1 per cent in 2019 and 2.0 per cent in 2020, following growth of 0.9 per cent in 2018. The estimated growth of 2.0 per cent in 2020 would be attributable to a gradual improvement of Argentina’s and Brazil’s economic conditions.

If slowdowns in the economies of the United States, China and the EU — the region’s main trading partners — are worse than expected and if there is renewal of financial volatility, additional weakening of the recovery could take place.

“In several of the region’s economies, ongoing political uncertainty clouds the prospects for investment and growth,” reads the report. “In view of significant downside risks, limited inflationary pressures and constrained fiscal space, most central banks are likely to maintain accommodative monetary policies to support growth.”

The regional projection is largely one of contrasting fortunes, with contractions expected in Venezuela, Nicaragua and Argentina while positive growth prospects are still expected for other countries including Peru, Bolivia, the Dominican Republic and Panama — due to activity sustained by strong domestic demand involving increased spending on infrastructure.

In the Caribbean, specifically, the report anticipates that commercial production of oil in Guyana will probably improve regional growth in 2020. A weaker-than-anticipated growth rate is expected for Brazil and Mexico, which should remain below two per cent in 2019 while Guatemala, Honduras, and El Savador are likely to see muted growth rates of 2.0 to 3.5 per cent.

The report identifies several downside risks that could trigger a sharper or more prolonged growth slowdown in the world economy, potentially inflicting significant damage on development progress. These risks include a further escalation in trade tensions, a sudden deterioration in financial conditions, and the accelerating effects of climate change.

“More comprehensive and well-targeted policy responses are needed to tackle the current growth slowdown,” says Elliot Harris, UN chief economist and assistant secretary general for economic development. “It is increasingly clear that policies to promote sustainable development will need to look beyond GDP growth and identify new and more robust measures of economic performance that appropriately reflect the costs of inequality, insecurity and climate change.”