The sudden drop of investment in Mexico and the social tension in Chile is affected by the growth of Latin America

Mexico is the example more typical of a maximum economic that is true to the letter: without investment, public and private, the chances of growth are minimal.

The sudden drop of investment in Mexico and the social tension in Chile is affected by the growth of Latin America

Mexico is the example more typical of a maximum economic that is true to the letter: without investment, public and private, the chances of growth are minimal. And Chile, of which the social and political instability caused by a growth very uneven affect, and much, the good functioning of an economy. Both factors in the extreme north and south of Latin America will push to lower the regional GDP this year and next, up to a growth of 1.6% and 2.3%, respectively, two and one-tenth less than expected in October, according to figures published this Monday by the International Monetary Fund (IMF) in the framework of the Davos Forum. The counterweight makes Brazil by far the largest economic power in the regional, where the greatest dynamism will be injected this year some verve to the activity of the area. All in all, the expansion of the economy of Latin america and the caribbean will be significantly higher in 2020 and 2021 in the year just ended, when it barely surpassed 0 per cent (0.1%).

The corrections to the low-to the block of Latin american, point the technicians in the Background on your updating of forecasts, "due to a cut in the growth forecasts of Mexico [1% this year and 1.6% next, in both cases, three tenths less than expected up until now] by the continued weakness of investment and a significant downward revision of the growth of Chile, which has been affected by the social tension". To know the size of the bite on the economy of the south american country will have to wait a few weeks, when the statistical office of the chilean public figure expansion of the close of 2019, but the company with headquarters in Washington anticipates, to his way, that will be important.

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On the opposite side, the body that commands Kristalina Georgieva reviewed slightly upwards the forecast for brazilian for this year —two-tenths, to 2.2%—, all a rarity in a world picture, marked by the corrections to the low, and leaves almost intact its forecast for 2020, when Brazil is expected to grow 2.3%, only a tenth below the forecast in last October. In the Latin american giant, the Background shows an "improvement" after the approval of the pension reform, which takes pressure on the public accounts, and after the dissipation of disturbances on the supply in the mining sector".

The downgrade in growth projections is not limited, nor much less, in Latin america and the Caribbean. In their update of Monday, the IMF reduced in a similar proportion (one-tenth this year, two the next) its forecast for the global economy. Also for the emerging countries as a whole, you see clipped to their expectations in two-tenths each year, up to 4.4% and 4.5%. The snip comes, above all, as a result of a worsening in the economic horizon of the developing Asia, a region that reduced their expected growth in two-tenths this year and three the next. That loss helps, however, that the gap in growth between Latin America and the rest of emerging countries, a constant in recent years, to shorten it slightly: after closing 2019 at 3.6% of GDP, will fall to 2.8% in 2020 and to 2.3% in 2021, a few levels —still— very high.

Forgotten the so-called Washington consensus, and after the turn towards a shade more social, the Monetary Fund you see now "crucial" that the emerging countries (among them, of course, also the Latin american and the caribbean) to ensure the existence of "adequate safety nets to protect the vulnerable". "Across the group, the common aim overall is to achieve a more inclusive growth based spending on health and education to enhance the human capital, and, at the same time, boosting the income of businesses that generate jobs of high added value, and employing largest segments of the population." This is the recipe of the Fund to avoid a new social explosion as experienced in recent months in Colombia, Ecuador and, above all, Chile, after years of unbalanced growth. Their consequences have already begun to take a toll on GDP.

Updated Date: 21 January 2020, 09:00

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