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Eclac: Regional growth to rebound in 2015
SANTIAGO—Economic growth in Latin America and the Caribbean will recover in 2015 and reach 2.2 per cent on average, according to new estimates unveiled yesterday by the Economic Commission for Latin America and the Caribbean (Eclac).
According to the regional United Nations organization, this moderate rise will take place in the context of the global economy’s slow and heterogeneous recovery, with downward pressure on commodity prices and little dynamism in the region’s external demand as well as an increase in financial uncertainty.
The evolution of the global economy will have different impacts among countries and sub-regions in 2015, as it did throughout 2014. Central America plus Haiti and the Spanish-speaking Caribbean are expected to grow at a rate of 4.1 per cent, South America at 1.8 per cent, and the English-speaking Caribbean at 2.2 per cent.
The countries leading the regional expansion next year will be Panama, with an increase in its Gross Domestic Product (GDP) of seven per cent, Bolivia (5.5 per cent), Peru, the Dominican Republic and Nicaragua (five per cent).
In 2014, average regional growth was just 1.1 per cent, marking the smallest expansion since 2009. The region’s performance shows great heterogeneity among countries and sub-regions: Central America plus Haiti and the Spanish-speaking Caribbean grew 3.7 per cent, South America 0.7 per cent, and the English-speaking Caribbean 1.9 per cent.
In fiscal terms, Latin America will register a slight increase in its deficit to 2.7 per cent of GDP in 2014 from 2.4 per cent in 2013, while the Caribbean will reduce its deficit to 3.9 per cent in 2014 from 4.1 per cent last year. In addition, the public debt of the region’s countries will remain at low and stable levels, averaging around 32 per cent of GDP.
Meanwhile, accumulated regional inflation in the 12 months to October was 9.4 per cent on average, with a very diverse performance among countries, and the urban open unemployment rate will register a fresh decline to 6 per cent from 6.2 per cent the previous year, despite the weak job creation resulting from low economic growth.
The deceleration in investment observed since 2011, and which showed a roughly 3.5 per cent contraction during 2014, is an important factor in the decline of the GDP growth rate. These figures were presented during a press conference at Eclac’s headquarters in Santiago, Chile, by the Commission’s Executive Secretary, Alicia Bárcena, and are part of the annual report Preliminary Overview of the Economies of Latin America and the Caribbean 2014, which will be published soon.
“To invigorate economic growth and stop deceleration in the global economy’s current context entails significant challenges for the region,” Bárcena said during the press conference. “Among these, it is necessary to revive domestic demand prioritising the dynamic of investment. This should impact positively on the economies’ productivity and competitiveness.”
To that effect, Eclac proposes expanding the countercyclical macroeconomic architecture to incorporate mechanisms that protect investment financing, particularly that of infrastructure, through the different phases of the cycle.
At the same time, regional integration must play a leading role in increasing regional aggregate demand, supporting progress on productivity by including countries’ companies in regional value chains, and strengthening the region’s ability to handle external shocks through financial integration.