IMF reviews downward growth projections in Latin America and the world
The International Monetary Fund predicted on Monday a revised world economic growth of 3.3% in 2020 and 3.4% in 2021, but in Latin America the growth is projected to recover from an estimated 0.1% in 2019 to 1, 6% in 2020 and 2.3% in 2021.The figures disclosed in a report represent a downward revision of 0.1 percentage points for 2019 and 2020, and 0.2 for 2021, with respect to the outlook presented in October.
In the case of Latin America, the report says, the revisions are due to several factors, including a cut in the growth prospects of Mexico in 2020-21 and an important downward revision of the growth forecast for Chile, due to the social tensions of the last months.
However, it highlights that Brazil will grow in 2020 and attribute it to an improvement in the attitude after the approval of the pension reform and the dissipation of supply disruptions in the mining sector.
The dissemination of the IMF report coincides with the start of the World Economic Forum, held in Davos, Switzerland, from January 20 to 24, which will be attended by several world leaders.
According to the report, the global downward revision is mainly due to “unexpected negative results of economic activity in a few emerging market economies,” particularly India.
However, he says that there has been a stimulus in the markets "because of indications that manufacturing activity" and international trade reflects "intermittently favorable" news about the trade negotiations between the United States and China, and because of less fears that it will occur. A brexit without agreement.
The report considers that if the stabilization signals could last, they would give way to a favorable dynamic between consumer spending and an improvement in business spending, as well as a lower intensity of idiosyncratic factors that slow down activity in the main emerging economies.
The International Monetary Fund recommends stronger multilateral cooperation and the adoption of national policies that provide timely support to facilitate a sustained recovery that benefits everyone.
He points out that “in all economies, a key imperative - and increasingly relevant in a period of growing discontent - is to expand inclusiveness, and ensure that social protection networks are in effect protecting the most vulnerable and that structures of government reinforce social cohesion. ”
In emerging economies "that are experiencing macroeconomic difficulties related to internal imbalances," the IMF recommends "policy adjustments necessary to restore confidence and lay the groundwork for a return to stable and sustainable growth."
This implies, the report adds, the crucial thing of "ensuring that there are adequate safety nets to protect the vulnerable within the prevailing limitations."
Alicia Bárcena, the Executive Secretary of ECLAC, presented the annual report in Santiago, Chile on December 12, 2019. (File Photo)
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ECLAC: Latin America will close its worst economic period in 70 years in 2020
Strongly indebted economies should generally seek consolidation - regulating their pace to avoid a drastic slowdown in activity - and to that end they should better focus subsidies, expand the income generation base and ensure better compliance.
“A general common goal is to achieve more inclusive growth based on health and education spending to enhance human capital, and at the same time encourage the entry of companies that generate jobs with high added value and employ productively broader segments of the population, ”concludes the IMF report.
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