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Eclac: Region will grow 3.2%
The economies of Latin America and the Caribbean will expand by 3.2 per cent in 2014, which is higher than the 2.6 per cent from the end of 2013, according to a new Eclac report launched yesterday at a press conference in Santiago, Chile.
In its annual report Preliminary Overview of the Economies of Latin America and the Caribbean 2013, Eclac points out that less buoyant external demand, greater international financial volatility and falling consumption were the factors determining the more modest economic performance of countries in 2013, which brought down the three per cent estimate put forward by the Commission in July.
The next year is expected to see a moderately more favourable external environment help boost external demand, and in turn the region’s exports. Private consumption will also continue to grow, although more slowly than in previous periods. In the meantime, increasing investment in the region remains a challenge. As she presented the report, Alicia Bárcena, executive secretary of Eclac, said: “The world economic situation in 2014 provides opportunities and threats for Latin America and the Caribbean.”
Bárcena said: “Opportunities include increased international trade and the possibility of harnessing currency depreciations to ensure sustained changes in relative prices. This—along with industrial policies to support growth, boost regional integration and help small and medium-sized enterprises—could help to increase investment in diversifying production in tradable goods and to reduce the region’s structural heterogeneity.”
The threats facing the region include ongoing volatility in the global economy and higher external financing costs, as well as a smaller contribution by consumption to GDP growth and a worsening regional current account. According to the Preliminary Overview, next year the Caribbean will experience a recovery and post a figure of 2.1 per cent (following just 1.3 per cent growth in 2013).
The report states that the main challenge facing Latin American and Caribbean governments is to drive through social covenants for investment to boost productivity and growth with equality. These social covenants must have an institutional framework that provides certainty and clear rules, short-term policies to provide nominal and real stability and long-term policies that encourage more diverse investment in tradable goods sectors.
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