MONTEVIDEO – The International Monetary Fund forecasts for 2016 a contraction in Latin America’s average GDP of 0.4 percent, due mainly to economic problems in Argentina, Brazil and Venezuela, a senior IMF official said on Tuesday.

The head of the IMF’s Western Hemisphere Department, the Mexican economist Alejandro Werner, took part in a Montevideo conference on structural reforms.

“The panorama of Latin America is largely determined by economies like Venezuela, which faces a considerable projected contraction (some 10 percent); Brazil, which will experience a decline similar to last year’s; and Argentina, obviously because of the transition going on there,” Werner told the press.

As for the latter country, he said the “change in economic policy” enacted by the new government of President Mauricio Macri “will control the imbalances of that economy” and reactivate investments, but in the short term will show “negative growth.”

“The rest of the region’s economies show minor growth like we have seen in the past, but on the positive side,” the economist said.

Werner also noted that opportunities exist in Latin America for “greater regional integration” in finance and trade, something that a panorama of “greater international complexity and in which integrating into the global economy is getting harder,” should provide the leverage for significant growth.

Asked whether the IMF has evaluated the impact of establishing a free trade agreement between the European Union and Mercosur – a bloc made up of Argentina, Brazil, Paraguay, Uruguay and Venezuela – he said that such a deal “offers very important possibilities for the region.”

“We like the looks of it. Mercosur’s move to find this integration and the EU’s move to do the same in a situation where there is clearly less of a trend toward international free trade, we believe this is a very important initiative,” he said.

Attending the conference in Montevideo were Uruguayan Economy Minister Danilo Astori, while taking part in the day’s panels were also the finance ministers of Colombia, Mauricio Cardenas, and of Paraguay, Santiago Paz.

Also on hand will be the IMF’s chief economist, Maurice Obstfeld, and the presidents of the central banks of Argentina, Federico Sturzenegger, and of Uruguay, Mario Bergara.