Economic Comission for Latin America and the Caribbean (ECLAC) recently published its growth forecasts for Latin America’s economies in 2013. With a few exceptions, the news is disappointing. The 3.5 percent projected growth for Latin America’s economy is slightly above last year’s rate, but well below the 5 percent clip that the region has experienced since 2002.
Unsurprisingly, the biggest laggard will be Venezuela, where growth is expected to be 0.1 percent. Beset by high inflation and a high budget deficit, Venezuela’s economy will effectively enter recession. What makes this year different from 2012? Oil prices for one. In mid-April, the Economist Intelligence Unit forecast the price of Brent oil will average $107 a barrel this year, down $5/b from 2012.
Argentina’s economy will also be lackluster, notching 3 percent growth amid 20-30 percent inflation.
Among the economic heavyweights, Mexico’s economy is expected to expand by 3.5 percent, and Brazil’s by less than 3 percent. No doubt this is unwelcome news. But, for Mexico at least, the growth is within its trend rat
e.
On the upside there’s the “three Ps.” After a soft coup last year, Paraguay’s economy will rebound heartily this year, racking up 11 percent growth. Record crop prices, especially for soya, account for the growth. Meanwhile, Panama and Peru will enjoy 9 percent and 6 percent growth, respectively. The good news for Panama and Peru is that growth owes to sound economic policies that have encouraged foreign investment and reduced poverty.
The ECLAC report is entitled “As Tailwinds Recede: The Search for Higher Growth.” The Miami Herald provides a brief synopsis of the findings.
