Latin America Faces Slowing Growth as Commodities Fall, IDB Says

Latin America and the Caribbean face weaker economic growth over the next five years as commodity prices fall and governments struggle with fiscal deficits, the Inter-American Development Bank said.

Annual growth for Latin America and the Caribbean is forecast to be 3.9 percent through 2017, down from 4.8 percent during the five years before the 2007 global recession, the Washington-based lender said in a report today. Out of 21 major economies in the region that were reviewed for the study, only Colombia, Trinidad & Tobago and Belize were in better fiscal shape than before the financial crisis.

“Weaker fiscal balances are a cause for concern under current circumstances,” according to the report. “The space for monetary policy action has shrunk and sustained lower growth expectations place a limit on what monetary policy can achieve.”

To revive growth, governments should invest in infrastructure and bolster domestic savings, the IDB said.

To contact the reporter on this story: Eric Sabo in Panama City at esabo1@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net

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