Apr 2016 Financial News

Eclac: region’s economies will contract this year

Apr 11, 2016

SANTIAGO—The Economic Commission for Latin America and the Caribbean (Eclac) has revised downward its growth projections for the region’s economic activity, forecasting an average contraction of -0.6 per cent in 2016.

Eclac said that this new estimate reflects that the contraction experienced by regional Gross Domestic Product (GDP) in 2015 (-0.5 per cent) will extend to the current year.

“The new projections evidence the difficult global scenario in which low growth continues in developed countries, there is a significant deceleration in emerging economies (China in particular), increasing volatility and costs in financial markets, and low prices for commodities— especially hydrocarbons and minerals,” Eclac said.

“In addition, there is greater weakness in internal demand in the region’s countries, with the decline in domestic investment accompanied by a deceleration of consumption,” it added.

As in 2015, during 2016, Eclac said the growth dynamic shows marked differences between countries and subregions. The economies of South America— which are specialised in the production of commodities, especially oil and minerals, and have a growing degree of trade integration with China—will record a contraction of -1.9 per cent, Eclac said.

Meanwhile, the growth rate for Central American economies is forecast at 3.9 per cent, below the figure registered in 2015 (4.3 per cent).

If Central America and Mexico are taken together, ECLAC said projections for 2016 are 2.6 per cent, below the 2.9 per cent reached in 2015.

For the English- or Dutch-speaking Caribbean, estimated growth will be around 0.9 per cent in 2016, ECLAC said.

According to ECLAC, ending this phase of deceleration and invigorating growth in the current situation entails a series of challenges for the region’s economies.

On the one hand, ECLAC said it is essential to stimulate investment and increase productivity to resume a path of sustained and sustainable growth in the long term.

Additionally, it said efforts should be made to protect the social gains achieved in recent years and avoid rollbacks in the face of a lower economic growth scenario.

In this context, Eclac said countries need policies that sustain social and productive investment in the framework of smart fiscal adjustments. (CMC)

Source:
Trinidad Guardian, A18
Monday April 11, 2016