Latin American and Caribbean countries will grow an average of 2.7% in 2014 due to limited dynamism of the region’s principal economies, according to new projections from ECLAC. The UN agency also warned in its report that Latin America’s unemployment rate — which in 2013 registered a new minimum of 6.2% — could increase.
The Economic Commission for Latin America and the Caribbean (ECLAC) predicts that the 2014 regional growth rate will be slightly higher than in 2013 (2.5%) but lower than the rate forecast in December (3.2%), largely due to lower growth than expected in the region’s larger economies, Brazil and Mexico, which will expand by 2.3% and 3%, respectively.
The economic growth projection was also reduced for Argentina (1%), a country that took several steps in early 2014 to counter the imbalances of recent years, causing its economy to contract. Likewise, the impact of Venezuela’s complex economic situation will result in a contraction of -0.5% of that nation’s activity.
Latin American economies that rely on mineral resource exports may find it hard to achieve economic growth this year. The UN agency says the demand for commodities will remain limited, especially mining and food products, which, combined with currency appreciation in developed countries, would cause commodity prices to drop modestly.
Nevertheless, highly varied expansion levels are predicted for the region’s countries. Panama, Bolivia, Peru, Ecuador, Nicaragua and the Dominican Republic will have growth figures equal or higher than 5%, while a significant number of nations will register expansion of between 3% and 5%.
Economies of developed countries – such as the United States, the United Kingdom, Korea, Germany — have shown signs of recovery, but China’s economy is likely to remain subdued. China recently become Latin America’s most important trade partner.
ECLAC points out that the United States’ recovery will have a positive impact on the economies of its closest neighbors, especially Mexico and Central America, considering its importance as a trade partner. At the same time, the upturn of developed countries will benefit the Caribbean nations, more specialized in service exports, due to better performance by the tourism sector.
Saint Kitts and Nevis will grow by 3.1%, Bahamas 2.5%, Saint Vincent and the Grenadines 2.3% and Trinidad and Tobago 2.1%, the same figure projected for the whole group of Caribbean countries.