The World Bank delayed one year the rise in the region, after projecting a growth of 0.4% in 2015. Reduced global expansion to 2.8% and 4.4% for developing countries
IMF asks that Latin America is more productive to grow
The projection made by the World Bank for Latin American economies is worrying. Now drastically lowered its growth forecast to just four tenths put the red line this 2015, which means that the activity will stagnate before rebounding almost 2% in 2016 and 2.7% in 2017. It is, additionally a growth rate four percentage points lower than projected for developing economies.
Pessimism dominates. Only six months ago, the body that supports the most backward countries projected a rise of 1.7% growth for Latin America this year. However, now he says it will be halfway to 0.9% in 2014 which was closed, which means that the rally is postponed and will be slower. The forecast was in January 2016 was 2.9%, almost one point higher. It rose to 2.8% for next year, half a point less.
Latin America accelerate brake despite the current US, according to the OECD The IMF wants to postpone the rate hike in the US well into 2016 Latin America looking out of the big slowdown in Latin America’s exports, stalled for raw materials.
The problem summarized by the World Bank as follows. The countries of South America are struggling side of domestic demand, due to weak investor confidence, widespread droughts and cheaper raw materials. In the case of Brazil it is added as aggravating the damage it is doing the scandal Petrobras said Kaushik Basu, the chief economist.
The largest economy in the region will contract 1.3% this year, compared with a forecast to grow by 1%, and that drags the rest in the region. The moderation in growth in China also explains this sharp decline. The contraction will be deeper in Venezuela, 5.1% this year, compared with 4% in 2014 and 2% who said in January. The forecast is that the recession will moderate 1% in 2016.
In the projections for Argentina, the technical body projected growth of 1.1% in the current year, double than a year ago. The forecast was made six months ago was a contraction of 0.3%, so it improves you. The rapporteurs explain that this calculation is now more complete data because they have not had a hand in the latest report.
The situation in Mexico is described as “fragile” when referring to the business climate. America does, however, support which allows them to grow 2.6% this year, a projection that is in line with what we anticipated in January. The hope is that the contraction experienced in the US economy earlier this year is temporary and that growth will also pull in the southern neighbor to 3.2% in 2016.
The Mexican economy is the engine that makes the region, if being also the three largest. In relative terms, the countries that grow are Panama, where he expected to continue at a rate of 6.2% this 2015, and Peru, with 3.9% before returning to 5% in 2016. In the group of economies that pay more are also Bolivia, with 4.8%, and Guatemala, to 4%.
Colombia will grow 3.5% this year, according to new World Bank estimate, although in this case is almost a point below that anticipated in January and that also explains that, along with Brazil, has had to reduce the whole projection for Latin America. It is the country, in fact, that is exemplified to reflect this “complex transition” facing the entire subcontinent.
The World Bank notes that this adaptation to the new era of lower prices for oil and raw materials poses a major challenge for all developing economies, combined with the rise in financing costs. “This 2015 will be the fourth consecutive year of disappointing growth,” say the rapporteurs of the body, projecting an expansion of 4.4%.
“Fasten your seatbelts because there will be bumps ahead,” says the chief economist, but see a gradual improvement on the horizon. For next year, economic activity in emerging repuntaría to 5.2%. There would rise two decimals in 2017. The fear is that the body’s rate hike in the US harms countries that are showing more vulnerabilities.
For the whole of the global economy, the projection is lowered to 2.8%, two tenths less than that anticipated in January. Hence repuntaría midpoint in 2016 at the instigation of the low cost of energy. This is also explained by a more optimistic in Europe, thanks to stimuli, together with an expansion of 2.7% in the US analysis. The advanced economies will grow by 2% this year and 2.4% in 2016.
Postpone the rate hike But the World Bank warns that an “excessive appreciation” of the dollar for a “premature rise” in interest rates in the US could disrupt these projections if ends up affecting the recovery of the world’s largest economy. “The effects will be adverse to its trading partners,” he anticipates. It is one of the arguments of the International Monetary Fund to request that the rate hike was postponed.
As Christine Lagarde last week said from the IMF, economist Kaushik Basu advises the Federal Reserve is “better wait” in early 2016 to mark the beginning of the process of normalization of monetary policy in the US. “The will point out coming from the economy are mixed,” he said. Still, he admits that the Fed will start raising borrowing costs this year.
The two institutions agree to insist on this in the growth of developing economies can not depend only on the US as engine and they can not be so vulnerable to it. The recovery in the eurozone is still insufficient. The projection made by the World Bank is 1.5%, more optimistic than the 1.1% anticipated six months ago. From there it will rebound to 1.8% in 2016.
Ernesto Chong de León, Ernesto Emilio Chong Coronado
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