While the wider Latin America and the Caribbean grouping looks set to see a contraction in 2015, the Economic Commission for Latin America and the Caribbean (ECLAC) says Caribbean economies looks set to grow not only in 2015 but 2016 as well.
ECLAC today forecast a decline in the overall region’s economic activity for 2015 to -0.3 per cent from 0.5 per cent, and estimates that for 2016 growth will be close to 0.7 per cent. At the same time, it said, despite the regional trend towards a deceleration the region’s economies will show differentiated dynamics.
The countries of the Caribbean, for example, are expected to expand, an average, 1.6 per cent in 2015 and 1.8 per cent in 2016.
Mexico and Central America will grow 2.6 per cent in 2015 and 2.9 per cent in 2016.
Meanwhile, growth projections indicate that South American economies – specialised in the production of primary goods, especially oil and minerals and with a growing level of trade integration with China – will register the biggest deceleration.
Those economies are expected to experience contractions of about -1.3 per cent in 2015 and of -0.1 in 2016.
Among the main factors behind the growth drop are a weak internal demand; a global environment marked by a low growth of the developed world; an important deceleration in emerging economies, especially China; the strengthening of the dollar and a growing volatility in financial markets; and an important fall in primary goods prices, ECLAC said.
And the United Nations body warned that in order to face the economic activity deceleration it is imperative to revert the drop of the investment rate and the lower contribution of the gross capital formation affecting growth since it not only impacts the economic cycle but also the capacity and quality of medium- and long-term growth.
Energising investments is a fundamental task to change the current deceleration phase as well as to achieve a path of sustained and sustainable growth in the long term, the organisation concluded.