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Growth in Latin America and the Caribbean is expected to decline for a fifth consecutive year, dipping below one percent in 2015, the IMF said in its latest regional forecast.
The IMF’s recently released Regional Economic Outlook for the Western Hemisphere projects growth in Latin America and the Caribbean at 0.9 percent in 2015, down from 1.3 percent last year.
Near-term prospects remain fairly dim for South America, with output contractions projected in three of the largest economies for 2015—Argentina, Brazil, and Venezuela—while only Chile and Peru would see a pick-up in growth.
In contrast, growth is projected to be steady in Central America and the Caribbean, and strengthen in Mexico, thanks to lower oil bills for importers and robust economic recovery in the United States.
For 2016, growth in the region is expected to make a modest recovery to two percent.
The IMF said Central America’s economies are expected to benefit from the current external environment, particularly from the U.S. recovery. Growth in 2015 is projected at a solid 4.25 percent, close to last year’s number.
Economic recovery is also expected to continue in the Caribbean, although external, fiscal, and financial vulnerabilities remain high in several economies. In the tourism-dependent Caribbean, growth is projected to improve to two percent, in 2015.
The IMF called on policymakers in the region to ensure sound public finances, especially since downside risks to growth remain prominent.
Financial sector vulnerabilities will also need to be monitored carefully given that weaker earnings, tighter funding conditions, and a stronger U.S. dollar are testing borrowers’ resilience.
A key priority for governments is to tackle long-standing structural problems to raise investment, productivity, and potential growth. Improvements in business environments, infrastructure, and education will help to foster more diversified, resilient, and prosperous economies.