SANTIAGO – The UN Economic Commission for Latin America and the Caribbean, or ECLAC, revised its forecast for Latin America downward on Wednesday, saying that the region’s gross domestic product (GDP) would contract 0.90 percent this year.
In July, ECLAC estimated that the region’s economy would contract by 0.80 percent this year.
“Economic activity is expected to pick up in 2017 with an average growth of 1.70 percent,” the UN agency said.
The GDP of South America, whose economies specialize in primary goods like oil, minerals and agricultural commodities, is expected to contract 2.2 percent this year due to a drop of 8 percent in Venezuela’s economy.
The economies of Central America and Mexico are projected to grow 2.5 percent this year, while the Caribbean countries will see a 0.30 percent contraction in GDP.
The Dominican Republic, with 6.5 percent growth; Panama, with 5.4 percent; Nicaragua, with 4.5 percent; Bolivia, with 4.5 percent; Guyana, with 4.4 percent; Dominica, with 4.2 percent; and Costa Rica, with 4.2 percent, are expected to be the countries with the highest growth rates in 2016.
The largest drops in GDP are expected in Venezuela, with a contraction of 8 percent; Suriname, with 4 percent; Brazil, with 3.4 percent; Ecuador, with 2.5 percent; Trinidad and Tobago, with 2.5 percent; and Argentina with 1.8 percent.
In South America, Chile’s GDP will grow 1.6 percent this year, while Colombia’s economy will expand 2.3 percent; Paraguay’s 4 percent; Peru’s 3.9 percent; and Uruguay’s 0.60 percent, ECLAC said.
Mexico’s GDP is projected to grow 2.1 percent in 2016, below the average of its Central American neighbors.
“Stronger investment and better productivity are needed in order to maintain a sustained growth path and support the higher growth rates projected for 2017. Here, investment in infrastructure and technological innovation must play a key role,” the UN agency said in a statement.
ECLAC is optimistic about the outlook for most of the region’s countries in the next year, but it warned that inequalities within the region will persist.
“Prices for commodities in 2017 will show gains over average-2016 levels and growth is expected to be stronger in the economies of the region’s trading partners,” ECLAC said.