WASHINGTON – The region embracing Latin America and the Caribbean will suffer a noticeable economic slowdown this year, with the International Monetary Fund (IMF) estimating a lowly 0.20 percent growth, four-tenths less than forecast last July, chiefly due to a winding down of its largest economies: Brazil, Mexico and Argentina.
This near-zero increase, also dragged down by the crisis in Venezuela and instability in Ecuador, is far below the 1 percent growth chalked up in 2018.
In 2020, the Latin American economy will increase by 1.8 percent, the IMF said in its World Economic Outlook, five-tenths below the amount calculated just four months ago.
For the IMF, this considerable downward revision for 2019 is largely due to problems in Brazil, where interruptions in the mining sector punished the country in the first half of the year, and in Mexico, where investment continues to weaken and private consumption has slowed due to political uncertainty, waning confidence and greater costs of the national debt.
The IMF forecasts that the Brazilian economy will grow by 0.90 percent this year, one-tenth more than projected last July, and by 2 percent in 2020, four-tenths less. Nonetheless, the drop is sharper if compared with the April forecast: 1.2 percent less for this year and 0.50 percent less in 2020.
According to the IMF, the Mexican economy will pick up 0.40 percent this year and 1.3 percent next year, five- and six-tenths less that previously projected.
The IMF expects the Argentine economy to contract even more in 2019 due to less confidence, greater political instability and stricter conditions on foreign loans.
Fund projections indicate that Argentina will decrease by 3.1 percent in 2019 and 1.3 percent in 2020.
These data comprise a wake-up call for Argentine authorities, since the IMF had forecast a contraction this year of 1.7 percent, and a return to the positive side in 2020 with a 2.7-percent growth.
At the moment, IMF financial assistance for the Argentina government, with outlays of a total $56.3 billion, has not provided the effect expected by the multilateral institution, which forecast that Argentina will achieve primary fiscal balance this year.
Another Latin American country that has recently received a loan from the Washington-based organization is Ecuador, which finds itself in a situation of political instability following the adjustments applied by President Lenin Moreno’s administration to comply with IMF expectations.
In this case, the IMF believes the Ecuadorian economy will contract by 0.50 percent this year, though it will get back on the positive side in 2020 with a 0.50 percent increase.
However, the country with the worst economic outlook is again Venezuela. According to the Fund, Venezuela’s humanitarian crisis and economic implosion continue to have a devastating effect on the region, since the Venezuelan economy will drop by approximately one-third in 2019, or some -35 percent.
Among the positive aspects in Latin America are the encouraging prospects for Peru, Chile, Colombia and Bolivia, which are expected to have annual growth rates of more than 2.5 percent this year and next, though for the majority of countries in the region the forecasts have been revised to the downside.
Peru will be one of the driving forces of the region in 2019 and 2020, with an estimated growth of 2.6 percent this year and 3.6 percent next, though its data have been revised downward by 1.1 percent and four-tenths, respectively.
Chile is forecast to have a 2.5 percent growth this year, seven-tenths less that previously projected, and of 3 percent in 2020, four-tenths less.
Colombia will grow by 3.4 percent this year, the same as forecast four months ago, and by 3.6 percent in 2020, one-tenth less.
Bolivia will get a 3.9 percent boost this year and 3.8 percent next year, though lower than the growth rates above 4 percent it registered over the past decade.
Finally, the outlook is positive for Central America, which had an economic growth last year of 2.6 percent. The IMF predicts it will grow by 2.7 percent in 2019 and a solid 3.4 percent in 2020.