WASHINGTON – The International Monetary Fund’s director for the Western Hemisphere said two days after the organization cut its 2015 growth forecast for Latin America that economic “worries” prevail across the region.
In its World Economic Outlook Update released Monday, the IMF forecast growth of just 1.3 percent for Latin America in 2015, down nine-tenths of a percentage point from the Fund’s previous forecast in October.
The organization said it expects economic contraction in Venezuela and Argentina and growth of just 0.3 percent in Brazil in 2015, and it also lowered its forecast for Latin American growth in 2016 to 2.3 percent, down from 2.8 percent.
“Worries dominate across much of Latin America and the Caribbean today,” Alejandro Werner said in a press conference Wednesday at the Fund’s headquarters in Washington, referring particularly to a sharp drop in the price of oil and other raw materials.
He also pointed to “challenging external conditions” – including economic weakness in the Eurozone, China and Japan that is affecting global activity – as “an important drag for many countries.”
The IMF said Brazil is beset by “anemic” economic activity and “stubbornly weak” private sector confidence, although it added that President Dilma Rousseff’s commitment to “rein in the fiscal deficit and reduce inflation should help to shore up confidence in Brazil’s macroeconomic policy framework.”
The report offered a more optimistic assessment of northern Latin America.
It said Mexico’s economy is projected to expand by 3.2 percent this year, up from 2.1 percent in 2014 but lower than the October forecast for 3.5 percent growth.
Werner said the IMF’s growth forecast for Mexico is a “solid prospect,” although he cautioned that “lingering sluggishness in domestic demand (will offset) the positive spillovers from stronger U.S. growth.”