a particularly complex environment

A particularly complex environment

▪ The region exhibits a generalized andsynchronized economic slowdown at the levelof countries and sectors

▪ The slowdown in domestic demand isaccompanied by low external aggregatedemand and more fragile internationalfinancial markets

▪ Added to this context are the growing socialdemands and the pressures to reduceinequality and increase social inclusion

▪ Given this scenario, the region requirespolicies to stimulate growth and reduceinequality

International context

Three signs of stagnation and uncertainty

1. Growth of the world economy in 2019 is at its lowest rate since the global financial crisis and no significant improvement is expected in 2020.

2. World trade is progressively weakening amid rising trade tensions.

3. Financial vulnerabilities are apparent.

3.1

2.3

2.9

0.8

1.41.9

4.5

6.46.6

6.8

3.1

1.9

3.2

2.5

1.7

2.3

0.91.3 1.1

3.9

5.96.1 6.0

1.8

0.9

3.0

2.5

1.51.9

0.51.0 1.2

4.3

6.0 5.8

6.7

2.42.9

3.4

0

1

2

3

4

5

6

7

8

World Developedeconomies

United States Japan UnitedKingdom

Eurozone Emergingmarkets anddevelopingeconomies

EmergingAsia

China India EmergingEurope

Middle Eastand Central

Asia

Sub-SaharanAfrica

2018 2019 2020

The lowest level of global growth in a decade

SELECTED REGIONS AND COUNTRIES: GROSS DOMESTIC PRODUCT GROWTH, 2018 TO 2020a

(In percentages)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on OECD data (Economic Outlook, September 2019), WEO (IMF, October 2019), European Commission(Autumn 2019 Forecasts of November 7, 2019 ), Capital Economics (October 2019), European Central Bank (Projections as of September 12, 2019), WESP, United Nations (preliminary report2020).a 2019 and 2020 correspond to projectionsb The figures for India correspond to the fiscal year, which begins in April and ends in March of the following year.

YEAR-ON-YEAR CHANGE IN THE VOLUME OF WORLD TRADE, THREE MONTH ROLLING AVERAGE, JANUARY 2011 TO SEPTEMBER 2019

(In percentages, based on a seasonally-adjusted index)

Global trade is increasingly weakening amid trade tensions

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of the Netherlands Bureau of Economic Policy Analysis (CPB), World Trade

Monitor.

- 4

- 2

0

2

4

6

8

10

12

Jan

-11

May

-11

Sep

-11

Jan

-12

May

-12

Sep

-12

Jan

-13

May

-13

Sep

-13

Jan

-14

May

-14

Sep

-14

Jan

-15

May

-15

Sep

-15

Jan

-16

May

-16

Sep

-16

Jan

-17

May

-17

Sep

-17

Jan

-18

May

-18

Sep

-18

Jan

-19

May

-19

Sep

-19

2017 20183.4%

2019 (Jan-Sept)-0.4%

• World trade

volumes are

contracting for

the first time

since the global

economic and

financial crisis.

• Commodities

prices are falling.

The financial world continues to grow while the real economy does not

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of IIF (2018-2019) and OECD (2019).Note: The long-term interest rate curve was obtained as a median of long-term interest rates for government bonds with a maturity of 10 years for G-7 countries.

AVERAGE LONG-TERM INTEREST RATES AND GLOBAL DEBT, FIRST QUARTER OF 2018 TO THIRD QUARTER 2019

(Trillions of dollars and percentages)

236

238

240

242

244

246

248

250

252

254

256

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

I II III IV I II III

2018 2019

Long-term nominal interest rates (%)

Global debt (US$ trillions) (Right axis)

• Global debt levels reach record highs with elevated financial vulnerability.

• Low interest rates boost the search for higher risk returns.

• Debt increases at a rate greater than that of world GDP.

• Debt increases for all agents (households, governments and the financial and non-financial corporate sector).

80

90

100

110

120

Jan

-18

Ap

r-1

8

Jul-

18

Oct

-18

Jan

-19

Ap

r-1

9

Jul-

19

Oct

-19

Energy

Agricultural products

Metals (non precious) and minerals

YEAR-ON-YEAR CHANGE IN COMMODITY PRICES, 2016 TO 2020a

(In percentages, based on average annual prices)

After a 5% fall this year, further lows in commodity prices are expected in 2020

EVOLUTION OF COMMODITY PRICE INDEX, JANUARY 2018 TO OCTOBER 2019

a 2019 corresponds to estimates and 2020 to projections.b This category includes oil, natural gas and coal.

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on data from the Pink Sheet of the World Bank; International Monetary Fund (IMF); Economist Intelligence Unit, Bloomberg; Energy Information Administration (EIA), Capital Economics and Central Bank of Chile, Monetary Policy Report, September 2019, Santiago for the price of copper.

2016 2017 2018 2019a 2020a

Agricultural products 4.1 0.5 0.9 -3.5 -0.6

Foods, tropical beverages and oilseeds

5.7 -0.6 -2.3 -4.4 -0.9

Foods 9.3 -0.1 -3.4 -1.0 0.3

Tropical beverages 0.6 -1.7 -10.1 -7.7 2.5

Oils and oil seeds 2.4 -1.0 1.5 -8.3 -3.4

Forestry and agricultural raw materials

-2.3 4.9 13.4 -0.3 0.5

Minerals y metals -0.7 23.3 4.2 -1.3 -1.7

Energy b -16.3 23.5 25.6 -10.5 -3.3

Crude oil -15.7 23.3 29.4 -11.5 -4.5

All commodities -4.3 14.6 9.9 -5.4 -1.9

All commodities (excl. energy) 1.8 10.8 2.6 -2.4 -1.2

Five warning signs in the region1. Sixth year of low growth for the region, a situation that will

continue in 2020: GDP per capita has contracted 4.0% between 2014 and 2019.

2. The slowdown is widespread: more countries and more sectors.

3. Lower trade volumes and less favorable terms of trade.

4. Aggregate domestic demand weakens: consumption and investment slow or contract; low contribution of public spending to growth and internal credit declines.

5. Inequality is inefficient and threatens growth. It is at the heart of social unrest due to job deterioration, low levels of income, insufficient provision of public goods and underdeveloped social protection systems, all of which undermine growth.

External Sector

-10

-5

0

5

10

15

Exporters of hydrocarbonsᵇ

Exporters of minerals and

metalsᶜ

Mexico Latin America CentralAmerica,

Dominican Rep.and Haiti

Exporters of agro-industrial

productsᵈ

Brazil The Caribbeanᵉ

2017 2018 2019ᵃ

-28,7

LATIN AMERICA AND CARIBBEAN (COUNTRIES AND GROUP OF SELECTED COUNTRIES): CHANGE IN TERMS OF TRADE, 2017 TO 2019(In percentages)

Lower commodity prices translate into a deterioration of the terms of trade for the region, especially for exporters of hydrocarbons

and mining products

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.a The figures for 2019 correspond to projections.b Bolivia (Plurinational State of), Colombia, Ecuador, Trinidad and Tobago and Venezuela (Bolivarian Republic of).c Chile and Peru.d Argentina, Paraguay and Uruguay.e Excludes Trinidad and Tobago.

LATIN AMERICA AND THE CARIBBEAN: YEAR-ON-YEAR VARIATION OF EXPORT VOLUMES AND GDP GROWTH RATE OF TRADE PARTNERS, 2012 TO 2019

(In percentages)

The deceleration in external demand has resulted in slower growth in the region's export volume

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.

4.5

1.7

2.5 2.62.1

4.3

2.6

0.6 2.0

2.2

2.4

2.6

2.8

3.0

0.0

1.0

2.0

3.0

4.0

5.0

2012

2013

2014

2015

2016

2017

2018

2019

Variation of exported volume GDP growth of trade partners (right axis)

LATIN AMERICA AND THE CARIBBEAN: YEAR-ON-YEAR VARIATION OF GOODS IMPORT VOLUMES, 2012 TO 2019(In percentages)

Imports are also decreasing as a result of the deceleration in investment and consumption


24.3

11.8

3.5 3.0-0.2

-3.7 -4.9

5.2 6.5

-0.9

-10

-5

0

5

10

15

20

25

30

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

- 0.9

0.20.8

0.4 0.4

- 1.1

- 1.0 - 1.0 - 1.0 - 1.0

- 2.5

- 2.6 - 2.8- 3.1 - 3.3

1.31.5

1.51.7 1.8

- 3.2

- 1.9- 1.5

- 2.0 - 2.0

-5

-4

-3

-2

-1

0

1

2

3

2015 2016 2017 2018 2019

Goods balance Services balance Income balance

Current transfers balance Current account balance

LATIN AMERICA (19 COUNTRIES): CURRENT ACCOUNT OF THE BALANCE OF PAYMENTS ACCORDING TO COMPONENTS, 2015 TO 2019

(In percentages of GDP)

Current account balance remains steady, but the income balance has deteriorated


Increase in interest payments and reduction in FDI income: USD 8.5

billion

Increased remittances USD 7.6 billion

- 5

- 4

- 3

- 2

- 1

0

1

2

3

4

5

I II III IV I II III IV I II III IV I II III IV I II III IV I II

2014 2015 2016 2017 2018 2019

Latin America Mexico and Central America South America

Growth slowed in the first half of the year in the region, and it did so in a generalized way across countries

LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH RATE, 2014 TO 2019

(In percentages, based on constant dollars of 2010)


LATIN AMERICA: CHANGE OF GDP GROWTH IN THE FIRST SEMESTER OF 2019 IN RELATION TO THE SAME PERIOD OF 2018

(In percentages, based on constant dollars of 2010)

Growth in 18 of 20

Latin American

economies slowed in the first

half of this year

-12 -10 -8 -6 -4 -2 0 2

Venezuela (Bol. Rep. of)

Paraguay

Nicaragua

Chile

Peru

Uruguay

Dominican Rep.

Argentina

Costa Rica

Bolivia (Plur. State of)

Mexico

Cuba

Ecuador

Honduras

Haiti

El Salvador

Panama

Brazil

Colombia

Guatemala

There has been a significant contraction in all components of domestic aggregate demand

LATIN AMERICA: CONTRIBUTION OF PRIVATE AND PUBLIC CONSUMPTION, GROSS FIXED CAPITAL FORMATION AND GROSS EXPORTS TO GDP GROWTH, 2015 TO 2019

(In percentages)


• Gross exports are the only component of aggregate demand that has contributed

to growth.

- 2.0

- 1.5

- 1.0

- 0.5

0.0

0.5

1.0

1.5

2.0

I II III IV I II III IV I II III IV I II III IV I II

2015 2016 2017 2018 2019

Gross fixed capital formation Exports of goods and services (gross)

- 2.0

- 1.5

- 1.0

- 0.5

0.0

0.5

1.0

1.5

2.0

I II III IV I II III IV I II III IV I II III IV I II

2015 2016 2017 2018 2019

Private consumption General government consumption

Gross domestic investment in Latin America has decreased by 2.4 percentage points since 2014

LATIN AMERICA: FINANCING OF GROSS INTERNAL INVESTMENT, 2014-2019(In percentages of GDP, based on current dollars)


20.5

18.1

0.0

2.5

5.0

7.5

10.0

12.5

15.0

17.5

20.0

22.52

01

4

20

15

20

16

20

17

20

18

20

19

Foreign savings Gross national savings Gross domestic investment

National unemployment increased from 8.0% to 8.2%

LATIN AMERICA AND THE CARIBBEAN: NATIONAL AND URBAN UNEMPLOYMENT RATES AND NUMBER OF UNEMPLOYED

(In percentages and millions of people)

• The number of unemployed rose by one million people, and reached a new high,25.2 million.

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.a Estimates.

15

17

19

21

23

25

27

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

2014 2015 2016 2017 2018 2019ᵃ

National unemployment rate (left axis) Urban unemployment rate (left axis)

Number of unemployed (right axis)

LATIN AMERICA (11 COUNTRIES): INTER-ANNUAL

VARIATION OF THE RATE OF HOURLY

UNDEREMPLOYMENT, 2018 AND 2019a

(In percentage points)

The average quality of employment deteriorated in most countries

LATIN AMERICA (10 COUNTRIES): INTER-ANNUAL

VARIATION OF THE RATE OF INFORMAL

EMPLOYMENT, 2018 AND 2019a

(In percentage points)

• As in previous years, in 2019, self-employment expanded more than wage employment (3.0% versus 1.5%).

• In addition, hourly underemployment and labor informality increased more generally.

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.a The 2019 data refer to the interannual variation for the period January to September.

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

2018 2019ᵃ

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

2018 2019ᵃ

Fiscal, monetary and financial policies

LATIN AMERICA AND THE CARIBBEAN: COMPOSITION OF CENTRAL GOVERNMENT REVENUES, 2017 TO 2019


Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.Note: Simple averages. Dominica is excluded. The figures for 2019 correspond to: projections derived from budgets or official estimates for the end of 2019.

Fiscal revenues stagnate: decelerating growth combined with a low tax take and tax evasion

15.4 15.5 15.5 14.0 13.9 13.916.8 17.0 17.0

21.0 21.6 21.8

2.7 2.7 2.62.8 2.6 2.5

2.6 2.7 2.7

4.8 5.4 5.4

18.0 18.1 18.116.8 16.5 16.5

19.3 19.8 19.7

25.827.0 27.2

0

5

10

15

20

25

30

2017 2018 2019 2017 2018 2019 2017 2018 2019 2017 2018 2019

Latin America(16 countries)

Central America,Dominican Rep. and

Mexico

South America(8 countries)

The Caribbean(12 countries)

Tax revenues Other revenues

•Public revenues remain stable despite slow growth due to tax activism in recent years.

•There is an urgent need to advance in progressive taxation: wealth taxes.

LATIN AMERICA AND THE CARIBBEAN: COMPOSITION OF CENTRAL GOVERNMENT EXPENDITURES, 2017-2019



… and this in turn limits the capacity to expand public expenditure

15.3 15.3 15.212.9 12.9 13.0

17.7 17.7 17.421.6 21.8 21.9

3.5 3.2 3.13.8 3.5 3.3

3.3 2.9 2.9

3.6 3.5 3.7

2.3 2.5 2.62.2 2.5 2.8

2.4 2.5 2.5

3.3 2.8 2.7

21.2 21.0 20.918.9 18.9 19.0

23.4 23.1 22.8

28.5 28.2 28.3

0

5

10

15

20

25

30

2017 2018 2019 2017 2018 2019 2017 2018 2019 2017 2018 2019

Latin America(16 countries)

Central America,Dominican Rep. and

Mexico

South America(8 countries)

The Caribbean(12 countries)

Primary current expenditure Capital expenditure Interest payments

• Important reduction of capital expenditure and primary current expenditure (South America), with an increase in interest payments.

•The reduction in current primary spending put pressure on social spending just when it is more necessary than ever.

Greater public indebtedness has not translated into greater public investment

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.Note: Simple averages. The figures for 2019 correspond to: projections derived from budgets or official estimates for the end of 2019.

LATIN AMERICA (16 COUNTRIES): CENTRAL GOVERNMENT INTEREST PAYMENTS AND CAPITAL EXPENDITURE, 2000 TO 2019


2.5

1.7

2.5 2.6

3.0

4.2

3.23.1

0

1

2

3

4

5

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

Interest payments Capital expenditure

Since 2013, capital expenditure has been the variable of adjustment used to accommodate rising interest payment.

The region continues to follow a process of consolidation to reduce deficits


LATIN AMERICA (16 COUNTRIES): CENTRAL GOVERNMENT FISCAL INDICATORS, 2015 TO 2019


THE CARIBBEAN (12 COUNTRIES): CENTRAL GOVERNMENT FISCAL INDICATORS, 2015 TO 2019


- 3.1 - 3.2 - 3.1 - 2.9 - 2.8

18.0 18.1 18.1

21.2 21.0 20.9

18.9 18.5 18.3

- 1.0 - 1.0 - 0.8 - 0.4 - 0.2

-6

-4

-2

0

2

4

6

8

10

12

10

12

14

16

18

20

22

24

2015 2016 2017 2018 2019

Global balance (right axis)Total revenues (left axis)Total expenditure (left axis)Primary expenditure (left axis)Primary balance (right axis)

- 2.6 - 2.2- 2.8

- 1.2 - 1.1

25.8 27.0 27.2

28.5 28.2 28.3

25.2 25.3 25.6

0.61.2

0.61.6 1.6

-6

-4

-2

0

2

4

6

8

10

12

10

12

14

16

18

20

22

24

26

28

30

2015 2016 2017 2018 2019Global balance (right axis)Total revenues (left axis)Total expenditure (left axis)Primary expenditure (left axis)Primary balance (right axis)


Despite fiscal consolidation, the level of public debt continues to rise while investment contracts

LATIN AMERICA (18 COUNTRIES): CENTRAL GOVERNMENT GROSS PUBLIC DEBT, 2000 TO JUNE

2019(In percentages of GDP)

LATIN AMERICA (18 COUNTRIES): CENTRAL GOVERNMENT GROSS PUBLIC DEBT, 2018 TO JUNE 2019


41.2

55.3

30.4 29.8

43.2

0

10

20

30

40

50

60

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

Jun

-19

86

.0

77

.2

50

.7

48

.6

48

.2

47

.7

47

.6

44

.6

42

.2

41

.9

39

.3

39

.1

37

.6

36

.8

36

.0

35

.4

32

.7

25

.6

24

.0

21

.1

16

.8

80.7

78.7

56.7

49.248.2

49.447.5

45.346.3

43.238.7

40.937.3

38.735.0

34.2

26.825.9

22.818.7

0

10

20

30

40

50

60

70

80

90

AR

GB

RA

CR

IC

OL

HO

NU

RY

SLV

ASU

REC

UA

L-1

8P

AN

CEN

TN

ICR

DO

BO

LM

EX HTI

CH

LG

TM PER

PR

Y

2018 June 2019


While in the Caribbean, high primary surpluses have contributed to reducing the level of public debt

THE CARIBBEAN (13 COUNTRIES): CENTRAL GOVERNMENT GROSS PUBLIC DEBT, 2000 TO JUNE 2019


THE CARIBBEAN (13 COUNTRIES): CENTRAL GOVERNMENT GROSS PUBLIC DEBT, 2018 TO JUNE 2019


12

4.0

10

2.9

93

.9

72

.6

71

.7

71

.4

68

.2

64

.4

63

.6

62

.2

61

.3

59

.8

47

.0

41

.1

122.6

97.091.5

69.069.070.667.662.361.158.756.157.5

43.339.1

0

20

40

60

80

100

120

140

BR

B

JAM

BLZ

SUR

CA

R-1

3

DM

A

VC

T

BH

S

ATG LC

A

GR

D

TTO

GU

Y

KN

A

2018 June 2019

59.4

72.5

59.5

69.0

0

10

20

30

40

50

60

70

80

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

Jun

-19

0

1

2

3

4

5

6

7

8

9Ja

n-1

5

Ap

r-1

5

Jul-

15

Oct

-15

Jan

-16

Ap

r-1

6

Jul-

16

Oct

-16

Jan

-17

Ap

r-1

7

Jul-

17

Oct

-17

Jan

-18

Ap

r-1

8

Jul-

18

Oct

-18

Jan

-19

Ap

r-1

9

Jul-

19

Oct

-19

Latin America and the Caribbean excl Argentina, Haiti and Venezuela (Bol. Rep. of)

South America excl Argentina and Venezuela (Bol. Rep. of)

Central America and Mexico excl Haiti

The Caribbean

LATIN AMERICA AND THE CARIBBEAN: VARIATION RATE OF THE CONSUMER PRICE INDEX (CPI) IN 12 MONTHS, WEIGHTED AVERAGE, JANUARY 2015 TO OCTOBER 2019

(In percentages)

Inflation is at historically low levels and is continuing to fall…


2,4%

3,6%

LATIN AMERICA (SELECTED COUNTRIES): MONETARY POLICY RATE IN COUNTRIES THAT USE IT AS THE MAIN POLICY

INSTRUMENT, JANUARY 2016 TO OCTOBER 2019(In percentages)

… which has allowed for expansive monetary policy in the majority of the economies of the region

Policy rates at low levels Accelerating growth of the monetary base

LATIN AMERICA (SELECTED COUNTRIES): INTERANUAL GROWTH OF THE MONETARY BASE, I QUARTER OF 2016 TO III QUARTER

2019(In percentages)


0

2

4

6

8

10

12

14

16

Jan

-16

Ap

r-1

6

Jul-

16

Oct

-16

Jan

-17

Ap

r-1

7

Jul-

17

Oct

-17

Jan

-18

Ap

r-1

8

Jul-

18

Oct

-18

Jan

-19

Ap

r-1

9

Jul-

19

Oct

-19

Brazil Chile Colombia

Mexico Paraguay Peru

Costa Rica Guatemala Dominican Rep.

-15

-10

-5

0

5

10

15

20

25

30

35

I II III IV I II III IV I II III IV I II III

2016 2017 2018 2019

Bolivia Haiti

Uruguay Dollarized countries

The Caribbean

LATIN AMERICA AND THE CARIBBEAN: EVOLUTION OF GROSS INTERNATIONAL RESERVATIONS, 2012 TO 2019(In billions of dollars and percentages of GDP)

Expansive monetary policy has been complemented with greater use of international reserves, to mitigate exchange

volatility


834829

857

812

831

859

867861

12

13

14

15

16

17

18

19

20

800

810

820

830

840

850

860

870

8802

01

2

20

13

20

14

20

15

20

16

20

17

20

18

20

19

International reserves (in million USD)

In percentages of GDP (right axis)

Forecasts

In 2019 growth in Latin America and the Caribbean will slow to 0.1%

LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH RATE, 2019(Percentages, based on constant dollars of 2010)

-25,5

The number of countries with growth of 1% or less in 2019 is the highest in

many years

-25,5

-5.3-3.0

-0.7-0.2-0.1

0.00.00.10.10.20.30.40.50.50.80.91.01.41.71.82.02.12.12.22.32.42.52.93.03.03.23.33.33.5

4.54.8

6.29.0

Venezuela (Bol. Rep. of)NicaraguaArgentina

HaitiEcuador

SOUTH AMERICABarbados

MexicoLATIN AMERICA

LATIN AMERICA AND THE CARIBBEANParaguayUruguay

Trinidad and TabagoCuba

CENTRAL AMERICA AND MEXICOChile

BahamasBrazil

THE CARIBBEANJamaica

Costa RicaSaint Lucia

SurinameBelize

El SalvadorPeru

CENTRAL AMERICASaint Vincent and the Grenadines

HondurasBolivia (Plur. State of)

Saint Kitts and NevisColombia

GuatemalaGrenadaPanamaGuyana

Dominican Rep.Antigua and Barbuda

Dominica

7

9 9 98

5

14

2013 2014 2015 2016 2017 2018 2019

-25.5%

Growth in 2020 is projected to continue at low levels for the regionLATIN AMERICA AND THE CARIBBEAN: PROJECTION OF THE GDP GROWTH RATE, 2020

(Percentages, based on constant dollars of 2010)

-1.4-1.3

-0.60.10.30.5

1.01.21.31.31.31.31.51.51.61.61.71.71.91.9

2.32.42.6

2.93.03.03.23.23.2

3.53.5

3.84.0

4.74.9

5.66.5

Venezuela (Bol. Rep. of)NicaraguaArgentinaBahamasEcuador

HaitiCubaChile

SOUTH AMERICALATIN AMERICA

BarbadosMexico

LATIN AMERICA AND THE CARIBBEANUruguay

Trinidad y TabagoJamaica

CENTRAL AMERICA AND MEXICOBrazil

SurinameCosta Rica

BelizeEl Salvador

Saint Vincent and the GrenadinesCENTRAL AMERICA

HondurasParaguay

Bolivia (Plur. State of)Saint LuciaGuatemala

PeruColombia

Saint Kitts and NevisPanamaGrenada

Dominican Rep.Dominica

THE CARIBBEANAntigua and Barbuda

Guyana

-14,0

85.6

The current low growth trend began in 2014

Import substitution5.6%

Debt crisis and Washington Consensus

2.5%

Commodities boom4.0%

2014-20200.5%

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

19

51

19

53

19

55

19

57

19

59

19

61

19

63

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

20

15

20

17

20

19


LATIN AMERICA AND THE CARIBBEAN: ANNUAL GDP GROWTH RATES AND SIMPLE AVERAGES, 1951-2020(In percentages)

Policy recommendations

Policy recommendations▪ The region's low growth trend is related to structural constraints and

falling external demand.

▪ This weak performance also translates into a high degree of idle capacity.

▪ In the short term, significant fiscal stimuli are required that must be accompanied by fiscal sustainability measures focused on increases in the tax burden, greater progressivity in the tax structure and structural reforms in social protection systems.

▪ A different investment allocation is required to support a change in the productive structure to get out of the primarization of the economy in which it is trapped and change the commercial insertion of the region.

▪ To deal with financial vulnerability and exchange rate volatility, it is necessary to privilege the real economy by strengthening the instruments of macroprudential policy.

The relevance of active fiscal policy

▪ Reactivating economic activity requires greater public spending on investment and social policies:

▪ Mexico: Actions to Support the Economy (US $ 24,250 million) and the National Private Sector Infrastructure Investment Agreement (US $ 42,951 million)

▪ Chile: Employment Protection and Economic Recovery Plan (US $ 5.5 billion) and Social Agenda (approx. US $ 1.6 billion)

▪ Colombia: proposed Growth Law (Ley de Crecimiento) with measures to protect lower-income / vulnerable populations

▪ Increasing the level of spending in the short term, entails pressures on public debt that must be faced according to the differing capacities of the countries.

A strategy is necessary to guarantee fiscal sustainability in the medium term

▪ Growth and productivity are necessary conditions to maintain a sustainable trajectory of the debt / GDP ratio.

▪ Inequality is inefficient and reducing it is imperative for achieving greater growth and productivity.

▪ Fiscal sustainability requires structural reforms in tax systems to dismantle the culture of privilege:

▪ Improve tax progressivity (richest 1%), strengthening wealth taxes, those who have more pay more.

▪ Reduce tax evasion, which represents 6.3% regional.

▪ Reassess tax expenditures that represent 3.7% of regional GDP.

▪ Implement new generation of taxes on the digital economy, environmental and related to public health.

Political Economy of Growth▪ The role of the State is more important today

than ever.

▪ Countries need to review their models of growth and their policy toolbox.

▪ Macroeconomic policy requires greater coordination between Central Banks, fiscal policy and financial authorities.

▪ A social pact requires a management of the macroeconomy that stabilizes the economy but prioritizes sustainable development policies.

a particularly complex environment

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