The region’s 20 countries will grow 2.2 percent this year, cutting by half the 4.5 percent figure forecast for 2014 last December, said the Chile-based Economic Commission for Latin America and the Caribbean (ECLAC). It outlined a difficult trade environment on slumped metal prices, falling domestic consumption, and weaker private investment as reasons for the downgrade, despite economic recovery in key trading partner, the United States. Brazil, Mexico, and Argentina, the region’s leading three economies had their forecasts lowered, while Colombia and Bolivia were rare bright spots, set to expand more than 5 percent. Brazil is expected to grow 1.4 percent, down from 2.6 percent predicted for 2014 last year and lower than the 1.8 percent its government predicts. While Mexico is seen rebounding from being the region’s smallest grower last year with 1.1 percent growth, its 2.5 percent forecast for 2014 is 1 percent less than ECLAC predicted. Argentina was due to achieve 2.6 percent growth this year, but that was slashed to 0.2 percent after its peso devalued 21 percent this year and its outlook darkened on entering a "technical default" on its debt.
Colombia, the region’s fourth economy, will grow 5 percent, up from 4.7 percent, on boosted oil and coal exports, and is only bettered regionally by Panama and Bolivia with rates of 6.7 percent and 5.5 percent respectively.
Chile and Peru’s growth was downgraded as the world’s first and third copper producers are hit by sagging prices. Chile will expand 3 percent down from 4 percent in 2014, while Peru was revised downwards from 5.5 percent to 4.8 percent.
Venezuela is the only country to experience negative growth, seen contracting by 0.5 percent, revised from a 1 percent expansion in the respected commission’s estimates last December.
“It is important in all cases to increase investment and productivity to guarantee structural change with equality in the medium term,” said ECLAC’s Executive Secretary, Alicia Barcena, at the press conference in Santiago.
This should come through infrastructure projects and support for small business, and not through lowering workers’ salaries, Barcena added.