Tue. Apr 23rd, 2019

The World Bank cuts to 0.9% the growth forecast for Latin America this year

The World Bank cuts to 0.9% the growth forecast for Latin America this year



The World Bank (WB) cut this Thursday to 0.9% the forecasts of economic growth for Latin America in 2019, mainly due to the "weak or negative" development in Brazil, Mexico and Argentina and the "tragic collapse" in Venezuela.

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Six months ago, the forecasts of the multilateral organization for the region were of an expansion of 1.6% for this year, a figure that had already been broadly lowered from the previous forecast.

Excluding Venezuela, however, the World Bank forecasts that Latin America and the Caribbean will grow by 1.9% in 2019 and 2.7% by 2020.

The lack of data on Venezuela complicates the work of forecasts of the WB, so the forecast of the entire region for 2020 has not yet been calculated.

To address this situation, the chief economist of the World Bank for Latin America and the Caribbean, Carlos Végh, hopes that the countries of the region will develop social protection networks to support the poorest and most vulnerable population during the economic slowdown cycles. .

"Social programs that help absorb the impact of economic crises are common in developed countries, but they are not widespread enough in this part of the world," explained Végh.

For the WB official, this is a "pending" social agenda in the region to ensure that "those who recently escaped poverty do not take any steps back".

In this regard, WB vice-president for the region, Axel van Trotsenburg, considered that in "challenging" times for the economy, "it is more important than ever for countries to make the necessary reforms to promote sustainable and inclusive growth.

By country, Argentina begins 2019 immersed in a severe recession, and the World Bank projects that its GDP will fall by 1.3% this year, after a contraction of 2.5% in 2018.

The Brazilian economy, which contracted sharply in 2015 and 2016 and then recovered its positive growth in 2017, will advance 2.2% in 2019, according to the forecasts of the WB.

For its part, Mexico has started the year with a "modest, but stable" growth, so the Washington-based agency projects a growth of 1.7% by 2019.

The situation in Venezuela continues to worry deeply the multilateral institution, which believes that the country is suffering "the worst crisis in the modern history of the region."

The World Bank considers that the socioeconomic conditions in Venezuela "continue deteriorating rapidly" due to the fall in the price of oil, the "highly distorting" policies of the Government, a disorderly fiscal adjustment and bad economic management.

"(These factors) have caused hyperinflation, devaluation and a massive contraction in product and consumption," the experts highlighted in their semi-annual report.

The joint spring meeting of the WB and the International Monetary Fund (IMF), which brings together the world's leading economic leaders from its 189 member countries to analyze global challenges, will be held next week in Washington.

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