Latin America’s economies set to grow 1.1% on falling investment
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LATIN America’s economies, hit by falling investment, will grow just 1.1 percent in 2014 — their lowest level in five years, according to a UN commission on the region.
The poor performance of several of Latin America’s biggest economies dragged down growth across the region, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) said.
Argentina’s economy will contract by 0.2 percent this year and Venezuela’s by 3 percent, it said. Regional giant Brazil’s will grow just 0.2 percent.
The figures are the latest confirmation of the end of Latin America’s so-called “golden decade” of commodities-fueled growth.
The International Monetary Fund had made a similar diagnosis in October, forecasting regional economic growth of 1.3 percent for 2014, the lowest in five years, and 2.2 percent in 2015.
Regional growth is expected to bounce back slightly in 2015, to 2.2 percent, ECLAC said.
It said the sluggish growth came amid a slow and uneven recovery from the global economic crisis, falling commodities prices, increasing financial uncertainty and “scarce dynamism” in Latin America’s external demand.
Last year, the region’s economies grew 2.7 percent.
Growth this year is set to come in at the lowest level since 2009, when the region’s economies fell 1.3 percent at the height of the global economic crisis.
“To invigorate economic growth and stop deceleration in the global economy’s current context entails significant challenges for the region,” the ECLAC’s executive secretary, Alicia Barcena, said at a press conference in the Chilean capital Santiago.
“Among these, it is necessary to revive domestic demand prioritizing the dynamic of investment. This should impact positively on the economies’ productivity and competitiveness.”
ECLAC said one of the keys to reigniting growth was to expand counter-cyclical macro-economic policy in ways that would protect financing for investment, especially for infrastructure projects, even in gloomy economic weather.
Investment in Latin America has been slowing since 2011 and is on track to fall 3.5 percent this year, the ECLAC found.
It also recommended increasing the integration of the region’s economies as a way to boost productivity and demand and strengthen capacity to deal with external shocks.
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