São Paulo – Brazil and Argentina should collaborate with economic growth of Latina America and the Caribbean this year. The region’s Gross Domestic Product (GDP) should expand by 3.5%, according to forecasts disclosed on Tuesday (23) by the Economic Commission for Latin America and the Caribbean (Eclac). The organisation forecasts growth of 3% for the Brazilian economy this year and 3.5% for Argentina, based on expected recovery of agricultural activity and investment, as well as heated domestic demand.
“There should be continued growth in consumption and, to a lesser extent, in investment, fruit of improved employment indices and greater bank credit to the private sector,” said the Eclac. Added to that, collaborating to the growth of both countries is the high price of raw materials. The organisation forecasts reduction in global food prices and lower expansion in commodities, like ores and metals. Despite the reduction, the cost of products should remain high.
The Eclac forecasts partial recovery for the economy of Latin America and the Caribbean in 2013 and states that the foreign demand will not weigh heavily in the growth. “Persistent uncertainty as to the future course of the international economy, combined with sluggish developed economies, will mean that external demand will not contribute much to economic growth in 2013.,” says the organisation in the “Updated Economic Overview of Latin America and the Caribbean 2012”.
Most of the countries in Latin America and the Caribbean, except for Argentina, should continue presenting reduction in sovereign risk, says the Eclac. “Brazil, Chile, Colombia, Mexico, Peru and Uruguay, whose risk is lower than for the set of emerging countries worldwide, continued to see gradual improvement (and increasing convergence) in their indicators,” said the Eclac.
The countries of the region that are exporters of food and have as their main importers the Europeans should be affected. “Prospects are somewhat brighter for countries that export mining and metal products mainly to the Asian market, thanks to continuing strong growth of the Chinese economy and an expected uptick in economic activity in Japan,” shows the document.
Paraguay should lead in expansion in the region in 2013, with 10% expansion in GDP, followed by Panama, with 8%, Peru, with 6%, and Haiti, with 6%. The average growth for Latin America should be 3.5%. According to the Eclac, in 2012 the economy of Latin America and the Caribbean grew 3%.
The forecasted growth of 3.5% for Latin America and the Caribbean is slightly lower than that by the Eclac in December last year, 3.8%. The reasons for revision are the uncertainty regarding the future of the global economy, the lack of dynamism in developed nations and less dynamic recovery than expected in Brazil and Argentina.
*Translated by Mark Ament
