The Latin American economy will grow by 2% in 2018, twice as much this year

The GDP of the Latin American economy will rise by 2 percent in 2018, almost double that of the forecast for the current year, of 1.1 percent, according to forecasts by the Economic Commission for Latin America and the Caribbean (ECLAC). The impulse that is beginning to be felt in the region is mainly due to the rise in the price of raw materials, the increase in world trade and the dynamism of the economies of Mexico and Brazil and Argentina, which recover from a long and deep crisis, according to the Executive Secretary of the Commission, Alicia Bárcena.

However, the low growth expected for this year, coupled with two continuing recessionary years, could be reflected in an urban unemployment rate of 9.4 percent in 2017, higher than the previous forecast, and 0.5 percentage points higher than in 2016. In this unemployment rate is influenced by the lower contribution of Foreign Direct Investment (FDI), which would fall 5 percent in all Latin America in 2017 to add four years of consecutive falls, although a better outlook is expected for next year . “The investment should be better than in 2017, I see it closer to stabilizing in 2018,” said the head of the agency that depends on the United Nations.

However, this year the data are more positive than in 2016, when FDI decreased 17 percent from the high reached in 2011 with 206.935 billion dollars. In the region, FDI only grew in nine countries between 2015 and 2016, including the Bahamas, Panama, Colombia, the Dominican Republic, Brazil and Paraguay, among others.

Despite the recession, Brazil increased its income by 5.7 percent in 2016 and was the main recipient. Thus, it is vital to know that investment flows represent 3.6 percent of Latin American GDP.

Among the sectors to be highlighted in order to continue on the right track, according to Cepal, are the renewables, which could be an essential link to attract foreign capital in Brazil, Peru, Chile and Mexico. Also, lithium mining could advance in Bolivia or Argentina, along with tourism in Central America or manufactures in the largest economies in the region. To this end, among the challenges mentioned by Bárcena is to encourage the investment and commercial insertion model, as well as to jump on “the train that already started” of technology and sustainable development, with a focus on smart cities and innovation.

Leave a comment