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IDB: Economy in Latin America will grow at slow pace

According to IDB, the main reasons are the lack of investment and investments of poor quality.


Devdiscourse News Desk
Updated: 25-03-2018 09:08 IST
IDB: Economy in Latin America will grow at slow pace

It is expected that the Southern Cone (excluding Brazil) will present a growth rate of 2.9 percent in 2018 to 2020 and could lose 0.8 percent annual growth. (Image credit: Wikipedia)

The Inter-American Development Bank (IDB) gave a preview of the report that sets out the economic forecasts for Latin America and the Caribbean.

According to America Economia, for the IDB it will register a growth, calculated at 2.6 percent in its Gross Domestic Product (GDP), however, it shows a delay when compared with others such as Asia and emerging Europe (made up of countries such as Poland, Ukraine, and the Czech Republic), which project growth of 6.5 percent and 3.7 percent, for the same period of time.

For the IDB, the main reasons why Latin America and the Caribbean will not achieve such outstanding growth are the low levels of investment and the poor quality of investments.

But the forecasts of the entity do not stop here, warning that even that growth of 2.6 percent could weaken as a result of unexpected inflation.

"Such risks are not evenly distributed. It is expected that the Southern Cone (excluding Brazil) will present a growth rate of 2.9 percent in 2018 to 2020 and could lose 0.8 percent annual growth, " said the IDB.

According to America Economia, the entity also expects Mexico, during the period 2018 - 2020 to register a growth of 2.7 percent, losing one percent of GDP each the year in the said period, while Brazil would grow 2 percent per year in the next three years, registering a loss of 0.5 percent per year.

"An alternative scenario predicts higher-than-expected US growth, somewhat higher interest rates and more movement in trade policies. This combination could be neutral for the US economy, which continues to grow solidly, but the report states that it would be negative for Latin America and the Caribbean, "the IDB adds.

For José Juan Ruiz, Chief Economist of the IDB, it is not all bad news, since most of the region has grown again, however, he points out that the biggest challenges will be focused on increasing the levels and efficiency of investments, in order to increase production in the region and achieve faster and more stable growth, as per America Economia.