WASHINGTON – The International Monetary Fund said on Tuesday that the economy of Latin America and the Caribbean will shrink 0.6 percent this year, compared with its earlier projection of a 0.5 percent contraction.
The prediction is part of the latest edition of the IMF’s World Economic Outlook, which points out that while major regional economies such as Brazil and Venezuela are suffering, most other countries in the area continue to expand.
IMF economists also expect the region as a whole to enjoy growth of 1.6 percent in 2017.
“Confidence appears to have bottomed out in Brazil, and growth is forecast at -3.3 percent for 2016 and 0.5 percent in 2017, on the assumption of declining political and policy uncertainty and the waning effects of past economic shocks,” the IMF said.
The report projects further deterioration in petroleum-rich Venezuela, where gross domestic product declined 6.2 percent last year and is on course to fall another 10 percent in 2016 “as the decline in oil prices since mid-2014 has exacerbated domestic macroeconomic imbalances and balance of payments pressures.”
Venezuela’s jobless rate will top 20 percent in 2017, the Fund said.
Argentine GDP is likewise predicted to shrink 1.8 percent this year before adding 2.7 percent in 2017.
Falling oil prices are also a factor in the economic woes of Ecuador, the IMF said, forecasting GDP declines of 2.3 percent this year and 2.7 percent in 2017.
Colombia and Chile are experiencing a slowdown this year, but remain in positive territory, with gains of 2.2 percent and 1.7 percent, respectively.
Within the region, only Peru and Paraguay – each expanding at a 3.5 percent clip – are doing better this year compared with 2015.
Latin America’s No. 2 economy after Brazil, Mexico, will end the year with growth of 2.1 percent, down from 2.5 percent in 2015, the IMF said, though adding that the Aztec nation will resume an upward trajectory.