SANTIAGO – The Latin American and Caribbean economy will grow only 0.5 percent this year, according to a forecast released on Wednesday by the UN Economic Commission for Latin America and the Caribbean, or ECLAC.
At the end of 2014, the Santiago-based commission projected a 2.2 percent increase in regional gross domestic product for 2015, though that estimate was trimmed to 1 percent in April.
In its latest report, ECLAC said that the broad regional forecast encompasses significant differences.
Though South America is expected to experiment a 0.4 percent economic contraction, Central America and Mexico should experience growth of 2.8 percent and the Caribbean is likely to see a 1.7 percent expansion, the report said.
Panama will lead the region, with a 6 percent increase in GDP, while Mexico will see 2.4 percent growth and the Argentine economy will expand by 0.7 percent.
ECLAC predicts that Brazil will see a 1.5 percent drop in GDP and Venezuela will suffer a 5.5 percent contraction.
In view of the discouraging outlook, the UN commission called for invigorated investment to spur a return to growth and improve productivity.
The economic slowdown will affect employment, the report said, adding that the region-wide jobless rate will reach 6.5 percent, compared with 6 percent last year.
ECLAC attributes the downturn to both external and internal causes, including global economic weakness driven by faltering growth in China and other emerging economics, with the exception of India.
On the domestic side, the report cites the reduction in investment and the slower rate of increase in consumer spending, the principal factor of growth in previous years.
The decline in investment and a smaller contribution of gross capital formation to growth “are causes of concern,” as they affect both the economic cycle and the medium- and long-term capacity and quality of growth.