ECLAC, in updating its growth projections for the countries of the region, last week projected an average expansion of 1.3 per cent in Latin America and the Caribbean this year, slightly lower than that forecast this past August (1.5 percent).
It also foresees a growth rate of 1.8 percent for the region for 2019.
“As usual, the growth dynamic across countries and subregions will vary,” ECLAC said.
It said the economies of South America, which specialize in the production of primary goods, particularly oil, minerals and foods, are expected to grow at a positive rate (0.7 percent) this year, slightly lower than last year.
The Commission stated that better performance is expected for this subregion in 2019, with estimated growth of 1.6 percent on average.
As for the economies of Central America, it estimated growth of 3.2 percent for this year and 3.3 percent for 2019. If Central America and Mexico are both taken into account, the projection for 2018 is 2.4 percent and 2.5 percent for 2019, ECLAC said.
Average expected growth for the English- or Dutch-speaking Caribbean is 1.9 per cent for 2018, a higher revised figure compared to the August projection and this is mainly due to “a more vigorous oil sector in Trinidad and Tobago, the largest economy in the subregion, and influenced, in some cases, by spending efforts on post-natural disaster reconstruction.”
The growth rate expected for the Caribbean region is 2.1 percent, ECLAC said.
“Projections for 2019 are in a context of increasing uncertainty and medium-term risks,” ECLAC warned. “An ongoing risk for emerging economies in general, and for Latin America and the Caribbean in particular, is further deterioration of the international financial environment.
“The high levels of corporate and sovereign debt accumulated over years of lax global financial conditions constitute a risk for some economies that are more exposed to changes in the financial scenario – greater needs for external financing, greater proportion of foreign currency debt and short-term debt, among others,” ECLAC added.
Moreover, it noted that trade tensions have been escalating in recent months.
“Although these have still only been reflected in moderate revisions to the low volume projected for world trade and global economic activity for 2019, they constitute a risk to regional economic activity.”
It said trade tensions pose a risk not only to global trade and world economic growth in the medium-term but also to raw materials prices and global financial conditions as a whole, “generally linked to greater or lesser risk perception.”
“In light of this international scenario, internal demand will play an important role in the region’s growth over the coming year,” ECLAC said.
“Albeit with differences between countries, investment is expected to play a greater role, with private consumption continuing to be a major engine for internal demand in 2019,” it added.
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