Cepal warns of weaker growth in Latin America and puts Argentina in red

Countries in Latin America will grow by 1.3% in 2019, below 1.7% estimated in Decemberdue to the deterioration of world trade and economic crises in the countries of the region, according to ECLAC forecasts released on Thursday.

In its downward revision of the forecast for this year, the Economic Commission for Latin America and the Caribbean (ECLAC) He highlighted the contraction of the economies of Venezuela, Nicaragua and Argentina and warned against the "complex external scenario" that regional economies are facing. Specifically, Cepal preview for Argentine red numbers, with an estimated contraction of 1.8%, mainly because of the effects of the currency crisis that has complicated the country since last year.

In this last point, he emphasized the effect of persistence Commercial war between the United States and China, the main trading partners of several Latin American countries. "The trade war between the United States and China has not yet been resolved, which poses a risk not only to world trade and the global growth rate in the medium term, but also to the general financial conditions. related to the economic crisis, perception of a greater or lesser risk on the part of the agents ", explained CEPAL in a press release.

The possible impact on the value of raw materials – the driving force of regional economies – is of particular concern if trade restrictions increase. ECLAC predicts for 2019 a "slight decline" in the average price level of commodities (-5%), with a larger drop in energy products (-12%), although "if the deterioration in the level of global activity and trade is worse than expected, this projection could be revised downwards ".

We are also worried about the evolution of the economy of the China, on which a further slowdown is expected this year, with growth of 6.2%. "The main risks to the region's economic performance through 2019 remain the slowdown in the global growth rate, the sluggishness of world trade and the financial conditions of emerging economies," the commission said.

The collapse of the economies of Venezuela and Nicaragua

The Dominican Republic, with a 5.5% expansion, will drive regional growth, thanks to the economic prosperity of the United States, its main trading partner and its main source of remittances and tourists. Panama is in second place with an estimated improvement of 5%. For its part, Venezuela, with an estimated decline in gross domestic product (GDP) of 16%, is the country in the region that has the worst performance, due to the large-scale political and economic crisis that is confronted the government of Nicolás Maduro. In the last five years, Venezuelan GDP has contracted by 44.3%.

Nicaragua, also plunged into a political crisis that has affected trade and mainly in tourism, will experience a 5% drop in GDP, according to ECLAC estimates. In Brazil, the largest economy in the region, ECLAC expects a 1.8% expansion in 2019, slowly recovering from the severe economic crisis of previous years, while a 1.7% increase is forecast for Mexico. %. Bolivia – whose economy continues to show a high level of dynamism, thanks to public investment and consumption – would increase by 4.3%; Paraguay would do so at 4%, while Peru would increase by 3.6% and Chile and Colombia would reach 3.3%.

A.F.P / D.S.