World Economy

UN Forecasts Economic Expansion in South America

Peruvian GDP will see South America’s third-largest growth rate in 2017.Peruvian GDP will see South America’s third-largest growth rate in 2017.

The Economic Commission for Latin America and the Caribbean projected Peruvian economy will expand 3.5% this year, thus posting one of the highest growth rates in the region.

The United Nations body’s forecast is in line with Peru’s Central Reserve Bank forecast, also at 3.5%, and beats the country’s finance ministry’s 3% estimate, Bernama reported.

According to ECLAC’s April report, Peruvian GDP will see South America’s third-largest growth rate in 2017.

The commission’s updated projections for Latin America and the Caribbean place Bolivia at the forefront of regional growth at 4%, followed by Paraguay at 3.8%.

The report also projects Colombia will grow 2.4%, followed by Argentina (2%), Uruguay (2%), Chile (1.5%), Ecuador (0.6%) and Brazil (0.4%). On the other hand, Venezuela (-7.2%) will be the only country in the region ending the year in the red.

 As a whole, South America will expand on average 0.6% in 2017.

“The economies of South America, specialized in the production of primary goods–especially oil, minerals and food–will record average growth of 0.6%. This represents a slight downward revision to the 0.9% projected last December,” the UN agency said in a release.

Likewise, ECLAC foresees growth dynamic in 2017 contemplates a rise in external demand for these economies, as higher growth is expected for the trading partners of the sub-region’s countries.

Regarding Latin America and the Caribbean, the UN agency forecasts a 1.1% average expansion for this year, slightly below its 1.3% estimate in December 2016.

“In this context, investment in infrastructure must play a fundamental role since it serves as the foundation of sustainable growth,” the document continues. ECLAC also stresses the need to strengthen social and productive investment in a framework of smart fiscal adjustments.

“In this sense, officials should strive for sustainability in public finances in the region but in the context of policies that take into account both the impact on long-term growth capacity, and the social conditions of the region’s inhabitants,” it said.

Meanwhile, for Central American economies the growth rate is forecast at 3.6% in 2017, compared with the 3.7% projected in December.

This is explained primarily by the resilience seen in domestic demand, which is expected to be the principal motor of growth this year, along with a good growth forecast for these economies’ main trading partner: the United States.

For the English- or Dutch-speaking Caribbean, average growth is forecast at 1.4% in 2017, slightly above the rate projected in December (1.3%).

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