IMF downgrades growth projections for Latin America and the Caribbean

Economic growth projections for Latin America and the Caribbean have been downgraded in the latest World Economic Outlook (WEO) report from the IMF.

“In Latin America, activity slowed notably at the start of the year across several economies, mostly reflecting idiosyncratic developments,” the report stated. “The region is now expected to grow at 0.6 per cent this year (0.8 percentage points lower than in the April WEO), recovering to 2.3 per cent in 2020.”

The projection for Latin America and the Caribbean is part of a wider downgrade of global growth “to 3.2 per cent in 2019 and 3.5 per cent in 2020”. Compared to the slash in projections for Latin America and the Caribbean, the global projection is only lowered by 0.1 per cent from the April projection.

An improvement in global growth is expected between 2019 and 2020, but 70 per cent of this improvement is reliant on improved performances of “stressed emerging market and developing economies”, which brings uncertainty to any projections.

According to Gita Gopinath, economic counsellor and director of the Research Department at the IMF, the current global situation is also “self-inflicted” through insecurity due to policy uncertainty, sparked by trade tension and conflict.

“Dynamism in the global economy is being weighed down by prolonged policy uncertainty as trade tensions remain heightened despite the recent US-China trade truce. Technology tensions have erupted, threatening global technology supply chains, and the prospects of a no-deal Brexit have increased,” Gopinath explained.

The WEO, in presenting its projections for Latin America and the Caribbean focused on Brazil, Mexico, Argentina, Chile and Venezuela.