Download - 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
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
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
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
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)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
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)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
• 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)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
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
(In percentages of GDP)
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
(In percentages of GDP)
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.
… 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
(In percentages of GDP)
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
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.
LATIN AMERICA (16 COUNTRIES): CENTRAL GOVERNMENT FISCAL INDICATORS, 2015 TO 2019
(In percentages of GDP)
THE CARIBBEAN (12 COUNTRIES): CENTRAL GOVERNMENT FISCAL INDICATORS, 2015 TO 2019
(In percentages of GDP)
- 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)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
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
(In percentages of GDP)
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
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
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
(In percentages of GDP)
THE CARIBBEAN (13 COUNTRIES): CENTRAL GOVERNMENT GROSS PUBLIC DEBT, 2018 TO JUNE 2019
(In percentages of GDP)
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…
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
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)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
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
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
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
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
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.