IMF cuts growth estimates for Latin America

The International Monetary Fund (IMF) on Tuesday heavily reduced estimates of economic growth in Latin America, due to a more pronounced slowdown in Brazil and Mexico, exacerbated by global trade disputes and the deterioration of the confidence of investors and badysts.

The multilateral agency endorsed the downward correction of its estimates for Argentina, which had risen the previous week, by distributing the scoring report accompanying the country's fourth review of the economy planned under the pending program providing for the disbursement of more than $ 56 billion. For the Fund, the country will develop by 2020 a 1.1% and not 2.2%, as expected a quarter ago. This year, it would fall by 1.3%.

In its report on the World Economic Outlook (WEO), the IMF said it expects now that the region as a whole is developing 0.6% pace this year, a reduction of 0.8 points compared to the last calculation in April. In 2020, forecasts were also slightly adjusted downwards to 2.3%.

"In Latin America, the activity of several economies has slowed significantly at the beginning of the year, mainly due to idiosyncratic factors," said the agency, which called on governments to regulate spending budget and debt.

Tariff disputes and trade agreements, as well as rising debt and failure to implement major macroeconomic reforms have undermined the prospects for Brazil and Mexico, Latin America's leading economies, the IMF said.

In Brazil, where morale fades after credit ratings are downgraded and doubts about the feasibility of pension reform, the economy is expected to grow 0.8% this year, down 1.3 percentage points percentage compared to the last quarter. Estimate of April. By 2020, the activity would increase to 2.4%.

At the same time, the Fund also highlighted the slowdown in Mexican GDP, which is currently expected to conclude a new trade agreement with the United States and Canada. The second largest regional economy is expected to grow by 0.9% this year and reach 1.9% next year, with a 0.7 percentage point reduction in the 2019 estimate.

Latin America has experienced an economic slowdown in recent years and, according to the IMF, it has increased by only 1% in 2018, due to geopolitical factors, a fall in investment, and more moderate data. China and, more recently, a complex business environment.

In its Tuesday report, the Fund reduced its global growth forecast for this year and next year by 0.1 percentage point, to 3.2% and 3.5%, respectively, with the risks being mainly on the decline. .

Threats include "escalating trade and technological tensions" that could generate a long period of risk aversion, further exposing the vulnerabilities of emerging economies.

In the case of Argentina, the IMF noted that the economy had contracted in the first quarter, but at a slower pace than in 2018, so its forecasts have decreased slightly this year in the country of South America.

Despite everything, he noticed that inflation persists high and has designated the country as one of three emerging or developing countries that fails to reduce its price indexes. The other two: Turkey and Venezuela.

The report also drew attention to the humanitarian crisis and the "devastating effects" of the Venezuelan crisis, which would have resulted in a contraction of the economy of about 35% this year.