SANTIAGO, Chile – The economy of Latin America and the Caribbean is expected to grow by 3.5 per cent this year, less than previously forecast, because of uncertainty about the future of the world economy and slower growth in developed nations, the United Nations said on Tuesday.
The region’s growth estimate was also lowered from an earlier 3.8 per cent view because of “a recovery that has been less dynamic than expected” in Argentina and Brazil, said the UN’s Economic Commission for Latin America and the Caribbean.
Growth in the two South American powerhouses is still expected to help the region’s expansion, with a projected 3.5 per cent for Argentina and 3 per cent in Brazil on the back of improved agricultural activity and investment, the report added.
The UN agency known as ECLAC said the regional expansion will be backed by consumer growth as a result of better labour indicators, the rise of banking credit and investment.
“On top of this, there are high prices for commodities. Although they’re expected to be lower compared to 2012, they will be kept at high levels,” the Santiago-based agency said in a statement.
Brazil is a top producer of soft commodities like orange juice and coffee, the world’s biggest beef exporter and the No.2 producer and exporter of soybeans. Argentina is a global top exporter of soy meal and soy oil and the No. 3 exporter of the bean.
“South American countries, which generally are more specialized in the production and export of commodities, will grow on average 3.5 per cent in 2013 thanks to the preservation of growth in Asian economies,” ECLAC said. “This will bring positive economic outcomes both for the level of income as well as exporting activities.”
Growth in the export-dependent region will be led by Paraguay. The world’s No. 4 soy exporter is seen expanding by 10 per cent, followed by Panama’s 8 per cent and Peru and Haiti’s 6 per cent growth this year. Chile, Bolivia and Nicaragua will expand by 5 per cent. Colombia will clock 4.5 per cent growth and Uruguay will grow by 3.8 per cent, ECLAC said.
Mexico, Central America and the Caribbean, will benefit from “more dynamism in the United States. A stronger agricultural sector will benefit Cuba, Nicaragua and Dominican Republic, while improvements in construction sector will lift Guatemala, Honduras and Haiti.
“In the Caribbean the acceleration in the growth rhythm will continue with a rise of 2 per cent as a result of dynamism in economies specialized in the production and export of raw materials, mainly Guyana and Suriname,” ECLAC said. Growth also will be boosted in tourism-dependent Caribbean nations with an improved economic outlook in the United States.
The ECLAC also scaled back its 2012 forecast to 3.0 per cent from an earlier view of 3.1 per cent due to a slower global expansion hit by a recession in Europe, a slowdown in China and sluggish U.S. growth.
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