SANTIAGO – The Latin American and Caribbean region’s gross domestic product (GDP) will contract at an average rate of 1.1 percent in 2016 before growing at a 1.3 percent clip next year, the Economic Commission for Latin America and the Caribbean (ECLAC) said in a report released Wednesday.
In its preliminary overview of the regional economy, the UN commission said South America would be the hardest-hit sub-region this year with a 2.4 percent decline in GDP, while the Caribbean region is projected to shrink by 1.7 percent and Central America is forecast to grow by 3.6 percent.
The region, which contracted 0.4 percent last year, will resume growth in 2017 “moderately and without clear engines driving it,” Alicia Barcena, ECLAC’s executive secretary, said during the presentation of the report at a press conference in Santiago.
The recovery “will be fragile as long as the uncertainties of the economic context continue, particularly the recently observed protectionist trends,” she added.
Regional growth in 2016 will be led by the Dominican Republic and Panama, which are forecast to grow 6.4 percent and 5.2 percent, respectively. The worst-performing economies are expected to be those of Suriname, projected to contract by 10.4 percent, and Venezuela, forecast to shrink by 9.7 percent.
The urban unemployment rate is expected to climb to 9 percent, up sharply from 7.4 percent last year, due to a reduction in the employment rate and an increase in the labor force participation rate.
Regarding growth projections for 2017, higher commodities prices would benefit the terms of trade for South America, which is projected to get back on track with GDP growth of 0.9 percent, while the Caribbean is forecast to grow 1.3 percent – mainly due to tourism – and Central America is expected to expand by 3.7 percent.