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Latin America faces recession this year, weak growth next: UN
[SANTIAGO] Latin America's economies will contract a worse-than-expected 0.4 percent this year and grow just 0.2 per cent next year, as the global economic scenario remains "complex," a UN panel forecast Thursday.
The region is on track to post its worst economic performance in six years in 2015, and 2016 is only looking marginally better, said the Economic Commission for Latin America and the Caribbean (ECLAC).
"It is necessary to resume growth and reverse the contractionary investment cycle in a context of slow global recovery and a decline in trade," said executive director Alicia Barcena.
In its last regional forecast, in October, ECLAC had forecast a 0.3 per cent contraction this year and 0.7 per cent growth next year.
The commission predicted another year of weak prices for Latin America's commodities exports, weighed down by "uncertainty" over the economic slowdown in China, one of the region's key trading partners.
The pain will be worst in Venezuela, which faces a seven per cent contraction next year, and Brazil, the region's largest economy and the world's seventh largest, which faces a two percent contraction, it said.
Brazil's deep recession is weighing down the region, exacerbated by the political uncertainty surrounding President Dilma Rousseff, who is battling an impeachment bid.
The panel halved its 2016 growth forecast for Argentina, the region's third economy, to 0.8 per cent, as new right-wing President Mauricio Macri launches sweeping free-market reforms, including scrapping foreign exchange controls that were propping up the value of the peso.
Mr Macri says the measures are needed to reboot growth, but Ms Barcena said the effects, including a sharp devaluation, have led to "a less optimistic outlook."