The International Monetary Fund (IMF) said that economic activity in Latin America and the Caribbean stagnated in 2019, according to the latest report issued by the well-known entity.
The IMF concluded that “the region’s real gross domestic product (GDP) per capita has declined by 0,6 percent per year on average over the period 2014–2019, in sharp contrast to the average annual increase of 2 percent during the commodity boom period of 2000–2013.”
An analysis by Alejandro Werner, director of the Western Hemisphere Department of the IMF, indicates that after the investigation into regional challenges, prospects and risks, as well as the priorities assessed by economic policy, there are several factors that influence the region.
According to the IMF, the social upheavals that have occurred in recent years in Bolivia, Colombia, Chile and Ecuador have affected the regional economy.
Werner's analysis suggests that "growth needs to be revived and made more inclusive, while maintaining macroeconomic stability. Promoting competition will be important to avoid monopolistic practices that can disproportionately harm the poor," he suggests.
What is happening in countries in the region:
BrazilGrowth remained at a moderate 1,2 percent in 2019 but is projected to accelerate to 2,2 percent in 2020 on the back of a rebound in confidence following the passage of the pension reform and lower policy interest rates amid low inflation. Strong implementation of the government's broad fiscal and structural reform program will be essential to safeguard debt sustainability and boost potential growth.
Chile: The outlook is subject to uncertainty caused by social tensions and economic policy responses to social demands. After a sharp decline at the end of 2019, economic activity should gradually recover, supported by significant fiscal expansion and a
Colombia: Strong domestic demand in 2019 led to a rebound in growth to 3,3 percent and a widening of the current account deficit to 4½ percent of GDP. For 2020, growth is projected to accelerate to around 3½ percent on the back of continued monetary support, migration from Venezuela, remittances, civil works, and increased investment following recent tax policy changes.
Peru: Growth is estimated to have slowed to 2,4 percent in 2019, reflecting falling global trade and under-execution of public spending. As these factors dissipate in the coming years, growth is projected to rebound to 3,2 percent in 2020 and 3,7 percent in 2021, with inflation remaining well anchored within the central bank's target range.
Venezuela: The country remains mired in a deep economic and humanitarian crisis. Since 2013, real GDP has contracted by 65 percent, due to declining oil production, hyperinflation, the collapse of public services and the plummeting purchasing power. These trends are expected to continue in 2020, although at a slower pace. The severe humanitarian crisis has led to one of the largest migration crises in history, and migration to neighbouring countries is expected to exceed 2020 million people by 6, or 20 percent of the population.
Mexico: LEconomic activity stagnated in 2019 due to uncertainty about economic policies and slowing manufacturing output globally and in the United States. Growth is projected to recover to 1 percent in 2020 as conditions normalize, including the ratification of the United States-Mexico-Canada Agreement (USMCA) and the recent easing of monetary policy, which should continue as long as inflation expectations remain firmly anchored. Fiscal policy should seek to put the debt-to-GDP ratio on a downward path, prioritizing revenue growth, improved spending efficiency, and an improved fiscal framework.
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