The Economic Commission for Latin America and the Caribbean (ECLAC) is predicting that Barbados will record the lowest growth in the Caribbean of zero per cent this year before rising to 1.3 per cent next year.
In its preliminary overview of the economies of Latin America and the Caribbean for 2019, the UN agency said the region’s economies were experiencing a slowdown topping off six consecutive years of “low growth”.
It said the slowdown in domestic demand was being accompanied by low external aggregate demand and more fragile international financial markets.
“This context is compounded by growing social demands and pressure to reduce inequality and increase social inclusion,” the commission said.
“In this way, the macroeconomic situation in recent years shows a deceleration trend in economic activity, with a reduction in Gross Domestic Product (GDP) per capita, a decline in investment, lower consumption per capita, fewer exports, and a sustained deterioration in the quality of employment,” it added.
ECLAC said this will lead to the region growing just 0.1 per cent on average in 2019, and growth projections for 2020 will remain low at around 1.3 per cent.
“As a result, the 2014-2020 period will mark the lowest growth in the last seven decades for the economies of Latin America and the Caribbean,” the commission added.
The Caribbean is expected to record growth of 1.4 per cent this year and continues to lead growth next year to reach 5.6 per cent.
Central America will grow 2.4 per cent this year, and South America will contract -0.1 per cent.
During the presentation of the ECLAC document in Chile yesterday, Executive Secretary Alicia Bárcena said the region was unable to withstand adjustment policies and needed policies that would stimulate growth and reduce inequality.
“The current conditions require that fiscal policy be centered on the reactivation of growth and on responding to growing social demands said Bárcena.
In addition to growth strategies, the report emphasized that there was need for strengthening of states’ capacity for revenue collection.
According to the report, despite the difficulties and limitations that policy spaces currently face, in contrast to prior periods, the majority of the region’s countries now find themselves in situations of historically low inflation levels and relatively high international reserves.
“These conditions favour the capacity to implement macroeconomic policies that would tend to reverse the current low-growth scenario.
“To that end, it is critical to reactivate economic activity through greater public spending on investment and social policies,” ECLAC said.
The report is estimating that unemployment will rise from eight per cent in 2018 to 8.2 per cent this year in Latin America and the Caribbean, which amounts to an increase of one million people to reach a new maximum of 25.2 million.
It said this situation was compounded by a deterioration in job quality due to growth in self-employment, which exceeded salaried employment, and in labor informality.
The preliminary overview forecasts that in 2019 the country with the greatest expansion will be Dominica at nine per cent, followed by Antigua and Barbuda 6.2 per cent, the Dominican Republic (4.8 per cent) and Guyana (4.5 per cent).
In contrast, Venezuela will experience the greatest setback, with a contraction of -25.5 per cent, followed by Nicaragua (-5.3 per cent), Argentina (-3.0 per cent) and Haiti (-0.7 per cent).
ECLAC is predicting that Guyana will record some 85.6 per cent growth next year due to oil production starting in 2020.