November 30, 2020

Latin America deepens its slowdown due to crisis in Argentina and weakness in Mexico

Latin America will deepen its economic slowdown with an estimated growth of 0.8% this year and a slight rebound of 1.8% next year, so it must strengthen its commercial integration if it wants to boost its prospects, the World Bank (BM) said Thursday ).

These figures exclude Venezuela, which remains mired in a large and prolonged economic crisis.

"The years of high prices of raw materials have already clearly lagged behind, we must focus on areas such as trade integration to revitalize the productivity of the region," said Martín Rama, chief economist of the agency for Latin America and the Caribbean.

Rama stressed that the region "is now in a stage of low performance."

"It would be tempting to attribute the slow growth of the region to a less conducive external environment. However, in general, the slowdown seems more self-inflicted than imported," the WB report said.

The report reveals how relatively low integration into international trade and global value chains has hampered growth in Latin America, and blames this limited economic openness to policies that led to a higher level of trade restrictions than in most developing regions. .

Interestingly, however, the current commercial tensions between the US and China have favored several countries in the region, with Mexico advancing China as the main trading partner of the United States, and Brazil capturing market share of US soybean exporters to the Asian giant.

To add complexity to the economic landscape, Latin America advances at different speeds.

On the one hand, the countries of the Pacific subregion, as well as of Central America and the Caribbean, continue to experience remarkable growth, compared to those of the Atlantic, which will do so at a slower pace.

Case apart in the area is Nicaragua, involved in a long political crisis, which is expected to end 2019 with a contraction of 5% this year, and 0.6% next.

On the positive side, Panama (4.5% for this year and 4.6% for the next); Guatemala (3.3% and 2.8%, respectively), Honduras (3.3% and 3.5%), and El Salvador (2.4% and 2.5%).

Also Chile (2.5% and 2.9%), Colombia (3.3% and 3.6%) and Peru (2.6% and 3.2%) will maintain their good prospects; and Ecuador faces difficulties with practically zero growth this year and next.

The three largest economies in the region are experiencing problems, especially Argentina, where the crisis is expected to deepen, with a contraction of 3.1% in 2019, and 1.2% in 2020.

Brazil will grow 0.9% this year and 2% next, while Mexico will further reduce its growth rate, and is expected to barely register an expansion of 0.6% this year, after a 2% growth in 2018 .

The WB will hold next week together with its sister institution, the International Monetary Fund (IMF), its annual assembly to discuss global economic challenges.

. (tagsToTranslate) Latin America (t) frenazo (t) Argentina (t) weakness (t) Mexico

Source link