UN body revises up LatAm growth outlook
After being pummeled by the commodity plunge, political crises and corruption scandals, Latin America's economy is gathering strength.
The IMF recently revised up its growth forecast - and on Thursday the UN's regional economic commission Eclac followed suit.
Eclac expects regional GDP, after contracting about 1.0% in 2016, will expand 1.3% this year, compared with a previous estimate of 1.2%. For next year the body held its forecast steady at 2.2%.
"These projections for economic activity in the region come about in a more favorable international context than in the last few years," Eclac said in a statement accompanying a 131-page report on the region's economies. "According to the report, in 2018 it is expected that the global economy will expand at a rate close to that of 2017 (around 3%) and that emerging economies will show greater dynamism than developed ones. In the monetary sphere, the current situation of ample liquidity and low international interest rates is seen holding steady."
In October the IMF increased its GDP growth forecast for this year for the region to 1.2%, up from a forecast of 1.0% made in July.
Key to the region's brighter prospects are a resurgent Brazil and Argentina - South America's two biggest economies.
Last year Brazil contracted 3.5%, stung by lower commodity prices and the fallout from an impeachment process and scandals surrounding state oil company Petrobras and construction giant Odebrecht. Eclac forecasts GDP will grow at a pace of 0.9% this year and 2.0% next.
In neighboring Argentina, impacted by weak commodity prices as well as structural and political factors, the economy shrank 2.2% last year. Eclac forecasts 2.9% for this year and 3.0% for next.
Eclac executive secretary Alicia Bárcena called on the region's governments to prioritize spending on initiatives that foster growth and tackle inequality and to boost tax collection and intraregional trade.
Bárcena also warned of risks that could impact growth in the medium term, among them those stemming from uncertainty over monetary policy normalization in the US, EU and Japan, and a trend in the US toward greater financial deregulation. She also cited US tax reform and increased protectionism and support for anti-globalization parties in some European countries.
S&P has warned that Argentina is particularly vulnerable to an eventual tightening in global financial conditions.
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