The Economic Commission for Latin America and the Caribbean (ECLAC) has revised its economic growth projections for the region for 2016 and now expects an average contraction of -0.9% for Latin America and the Caribbean this year. Economic activity is expected to pick up in 2017 with average growth of 1.5%, according to a press release by the United Nations agency today.
The projections for 2017 reflect expectations of more auspicious global conditions than in 2015 and 2016. 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.
As in 2016, growth in 2017 will show marked differences between countries and subregions, ECLAC reports. The economies of South America, which specialize in primary goods —particularly oil, minerals and foods— will post average growth of 1.1% in 2017, contrasting with a contraction estimated at -2.2% in 2016.
The economies of Central America are expected to register growth of 4.0% in 2017, above the 3.7%, projected for 2016. For Central America plus Mexico, the projections are 2.5% for 2016 and 2.6% for 2017. In the English- and Dutch-speaking Caribbean, average growth is estimated at 1.4% for 2017, contrasting positively with the contraction of -0.3% expected for 2016.
According to ECLAC, 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.
At the same time, in order to safeguard the progress made in recent years on the social front, ECLAC calls for policies to maintain social and production investment in a framework of smart fiscal adjustments. Efforts are needed to ensure the sustainability of the region’s public finances, with policies that consider both the impact on long-term growth capacity and the social conditions of the region’s population.
In view of the current economic downturn, ECLAC again affirms that the region needs a progressive structural change with an environmental big push to drive development based on equality and environmental sustainability. Public and private investment policies need to be coordinated across different areas to reshape patterns of production, consumption and energy, based on learning and innovation. This will help move the region towards fulfilment of the 2030 Agenda for Sustainable Development and the Sustainable Development Goals.