SANTIAGO, Chile – Plummeting economies in Venezuela and Brazil are expected to drag Latin America into negative growth again this year, the U.N.’s Economic Commission for Latin America and the Caribbean reported Tuesday.
The commission projected a 0.8 per cent slide in the region’s overall gross domestic product for 2016 , a bit worse than last year’s 0.5 per cent dip.
It said global growth remains slow, with low prices for Latin American commodities and financial uncertainty fed in part by the United Kingdom’s vote to leave the European Union.
The worst performers are expected to include troubled Venezuela, with an 8 per cent contraction, and Brazil, down 3.5 per cent. The commission forecast a decline of 2.5 per cent for Ecuador and Trinidad and Tobago and a 1.5 per cent dip in Argentina. It said South American economies overall will likely shrink by 2.1 per cent due to reduced internal and global demand for their products and deteriorating terms of trade: costlier imports and cheaper exports.
Low petroleum prices have hit especially hard in Venezuela, which has failed to diversify its economy away from near total dependence on oil exports.
Low fuel prices, however, are helping Central America, which is expected to see 3.8 per cent growth, partly due to growing internal demand and increased remittances from abroad.
The Caribbean is projected to see a 0.3 per cent slip.
The region’s performers are expected to be the Dominican Republic with 6 per cent growth and Panama, rising by 5.9 per cent. Nicaragua and Bolivia are forecast to grow by 4.5 per cent and Costa Rica by 4.3 per cent. All were at the top of last year’s growth statistics as well.
Mexico is projected to grow by 2.3 per cent and Colombia by 2.7 per cent.
The overall slide across the region is likely to mean greater urban unemployment, which could rise to 8.1 per cent this year from 7.4 per cent in 2015.
The commission’s executive secretary, Alicia Barcena, said that to accelerate economic growth, countries need to adopt policies that support investment and increase productivity. The commission also urged steps to reduce tax evasion.