In a positive development, today more than ever before, Latin American and Caribbean countries are pursuing counter-cyclical fiscal policies - spending more in bad times and saving in good times, according to a new World Bank semiannual report for the region.
Following two years in a downward trend the value of Latin American exports fell 14.8% in 2015, and 8.5% in the first seven months of 2016, according to the Trade and Integration Monitor 2016 of the Inter-American Development Bank. Services exports, which had partially compensated the fall in merchandise trade in previous years, contracted 2.4% in 2015, the first time since the 2009 financial crisis.
Latin America and the Caribbean will post an overall 0.5% economic contraction in 2016, the International Monetary Fund forecast in its latest report, capping the region's worst two-year period since the 1982 debt crisis. But the IMF said the region is expected to rebound to 1.5% growth in 2017, avoiding the lost decade phenomenon that marked the 1980s.
Latin America is expanding at a 'two-speed' rate according to the latest report from the Spanish bank BBVA, pointing out that the Pacific Alliance is expected to grow 2.5% in 2015/16, while Mercosur will be lagging with a contraction of 2% to 1.5%.
The value of Latin America’s exports will continue to decline through 2015 by 14%, with Argentina faring slightly worse with a reduction of 17%, says the UN Economic Commission for Latin America and the Caribbean (ECLAC) report, which also indicated that the value of imports to Argentina are set to fall by a smaller 10%.
The International Monetary Fund said today that it now expects Latin America's economy to shrink 0.3% this year instead of growing 0.5%, largely due to a steep recession in Brazil and slumping commodity prices. It would be the first recession for the Latin American and Caribbean region since 2009.
The International Monetary Fund sharply lowered its growth forecast for Latin America and the Caribbean to 0.5% in 2015 and 1.7% next year, citing lower commodity prices and China's transition to a new growth model. The figures are down from the IMF's April projections for 0.9% growth this year and 2% next year.
A new World Bank Group report, “Shared Prosperity and Poverty Eradication in Latin America and the Caribbean”, explores the performance of eight countries to understand what has driven progress, and what it will take to sustain it.
Latin America and the Caribbean's economic growth might recover modestly to 2.2% in 2015, up from 1.3% in 2014, its lowest rate since last decade's global financial crisis. Despite the slowdown, the region has managed to maintain its gains against poverty, said Inter-American Development Bank President Luis Alberto Moreno.
Exports from Latin America will drop by about 1.4% in 2014, the first decline in exports since the collapse of international commerce during the 2009 financial crisis, according to a study by the Inter-American Development Bank (IDB).