Latin America and the Caribbean have “weathered the global downturn comparatively well” and are now recovering at a “robust pace,” the International Monetary Fund (IMF) said Wednesday.
In a semi-annual report on the world economy, the IMF said Latin America and the Caribbean are set to grow by an average of 4% this year and in 2011, with exceptions such as Venezuela, whose economy is expected to contract in 2010.
According to its World Economic Outlook report, recovery within Latin America is set to be especially strong in commodity exporting, financially integrated economies.
These include Brazil, the world's 10th-largest economy, and also earthquake-ravaged Chile. In Brazil, growth in 2010 is expected to rebound to 5.5%, led by strong private consumption and investment, the IMF said.
Growth in the region's other major player, Mexico, is also expected to rebound to 4.25% in 2010, helped in part by the US recovery.
Still, it is Peru that the IMF expects to be the top growth performer of the region. ”GDP (Gross Domestic Product) is projected to expand by 6.25% in 2010, mostly thanks to favourable internal dynamics and high commodity prices, the report said on the Andean country. For next year, Peru is expected to grow by 6%.
Uruguay was set to grow by 5.7% this year and by 3.9% in 2011, with Brazil following a similar trend, going from 5.5% growth this year to 4.1% next year.
Mexico, the world's 13th-largest economy but one that is highly dependent on the United States, is likely to recover from the crisis that started in its main trade partner. Mexico's GDP fell by 6.5% in 2009 but is expected to grow by 4.2% this year and by 4.5% in 2011.
Argentina was to grow 3.5% this year and 3% in 2011, while Colombia was to jump from 2.2% growth in 2010 to 4% next year.
The IMF highlighted that prospects vary considerably across the region. It commended Bolivia and Paraguay on a relatively strong rebound, but pointed to Venezuela as a country where the recovery is expected to be delayed and weak, given ongoing power shortages.
Venezuela is the only country in the region for which the IMF projected negative growth this year, with a contraction of 2.6%, and only a minimal rebound in 2011 with growth of 0.4%.
According to the IMF, the recovery of Latin America and the Caribbean is due, among other factors, to accommodative policies that are helping underpin domestic demand.
Good fundamentals (sound financial systems, solid balance sheets) are helping the region recover and re-attract capital flows in an improved global financial environment, the report noted. The IMF also highlighted the importance of higher commodity prices and external demand as contributing to the region's growth.
On the down side, weak external demand for tourism from North America and Europe is impeding growth in a number of economies in the region, especially in the Caribbean,” and lower remittances are affecting many economies across the region.