After two consecutive years of regional contraction, Latin America and the Caribbean will see growth of 1.3% in 2017.

In the annual report “Balance Preliminar de las Economies de América Latina y el Caribe 2016”, the Economic Commission for Latin America and the Caribbean (CEPAL) calls for dynamism and the stimulation of public-private investment, in order to increase growth and to face the growing uncertainties of the international scenario.

The Executive Secretary of ECLAC, Alicia Bárcena, said that the average economy in Latin America and the Caribbean will grow again on a regional scale, but in a moderate manner. Its recovery will be slow as long as the uncertainties in the economic context persist, in particular the recently observed protectionist trends.

According to the United Nations report, the region will reach the end of 2016 with a contraction of 1.1%. South America will be the most affected sub-region, with a drop of -2.4%, the Caribbean with -1.7% and Central America recording positive growth of 3.6%.

The unemployment rate tends to rise and could reach 9% in 2016. Inflation is another variable with different performances in different sub-regions: in South America, inflation went from 9.2% in 2015 to 10. 9% in 2016, while the economies of Central America and Mexico began to record inflation of 2.5% in 2015 and 3.4% in 2016.

An increase in external demand is expected, given the higher global growth (2.7 in 2017 vs 2.2% in 2016) and the greater dynamism of world trade. Raw material prices will also be positive for South America.

Regarding growth projections for 2017, South America is expected to increase its GDP by 0.9%, the Caribbean by 1.3% and Central America by 3.7%.

However, it is worth highlighting the uncertainty in the international context regarding the possible revision of free trade agreements and more restrictive migration policies.
Given this situation, ECLAC recommends that Latin American and Caribbean countries continue to encourage investment through counter-cyclical economic policies, with increases in productivity, active fiscal measures and intelligent adjustments. The organization also recommends reducing tax evasion and fraud, which constitute 6.7% of regional GDP, greater control of public spending, a review of the structure of subsidies and incentives and a reorientation towards investment promotion.