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ECLAC anticipates minus 1.9% economic activity in South America

Staff writer ▼ | April 12, 2016
Latin America and the Caribbean are forecast to have an average economic activity contraction of -0.6% during 2016, according to the Economic Commission for Latin America and the Caribbean (ECLAC).
LatAm and the Caribbean   The new projections for South America
This new estimate reflects that the contraction experienced by regional Gross Domestic Product (GDP) in 2015 (-0.5%) will extend to the current year.

The new projections are evidence of the difficult global scenario with continued low growth in developed countries and a significant deceleration in emerging economies (China in particular), increasing volatility and costs in financial markets, and low prices for commodities— especially hydrocarbons and minerals.

In addition, there is greater weakness in region’s countries domestic demand, with the decline in domestic investment accompanied by a deceleration of consumption.

As in 2015, during 2016 the growth dynamic shows marked differences between countries and sub regions, ECLAC says.

The economies of South America—which are specialized in the production of commodities, especially oil and minerals, and have a growing degree of trade integration with China—will record a contraction of -1.9%.

Meanwhile, the growth rate for Central American economies is forecast at 3.9%, below the figure registered in 2015 (4.3%).

If Central America and Mexico are taken together, projections for 2016 are 2.6%, below the 2.9% reached in 2015. For the English- or Dutch-speaking Caribbean, estimated growth will be around 0.9% in 2016.

This new scenario for the economies of northern Latin America and the Caribbean reflects a weaker-than-expected recovery in the United States and shows the effects of fiscal policy adjustments that have been adopted in some economies of this sub-region, points out ECLAC.