World Bank Says Latin America Growth Slowing as Commodities EaseRaymond Colitt
Economic growth in Latin America and the Caribbean will slow this year as commodity prices remain flat or drop on a deceleration in China, the World Bank said in a report today.
The region’s economy will climb 2.3 percent in 2014 after expanding a “disappointing” 2.4 percent last year, the Washington-based lender wrote in the report, “International Flows to Latin America: Rocking the Boat?” That would be less than half the pace of growth in the years before the global financial crisis in 2008.
While financing raised through foreign direct investment and remittances will help the region absorb the impact of external shocks, some countries lack fiscal buffers needed to prevent vulnerabilities, according to the report, written by economists including the World Bank’s chief analyst for the region, Augusto de la Torre.
“As external tailwinds recede, Latin America and the Caribbean’s growth is taking a toll,” according to the report. “The region is indeed a place where large FDI inflows puzzlingly coexist with persistent low growth.”
Growth forecasts for this year range from almost 7 percent in Panama and 5.5 percent in Peru to a contraction of 1 percent in Venezuela. The region’s largest economies Brazil and Mexico will expand 2 percent or below, according to consensus forecasts, and about 3 percent respectively, the report shows.
China, which is one of the largest consumers of many of the region’s raw material exports such as copper, iron ore and soy, will increase 7.4 percent this year after climbing 7.7 percent in 2013, according to analysts polled by Bloomberg. The same survey shows Latin America’s gross domestic product climbing 2.4 percent in 2014.