ECLAC forecasts 5.5% economic growth in 2014 to Bolivia

The economies of Latin America and the Caribbean will grow on average 2.2% in 2014, due to weak external demand, sluggish domestic demand, insufficient investment and limited space for the implementation of policies that promote recovery, the agency announced today. Bolivia is in second place with a 5.5% growth this year

These elements differentially impact countries and regions of Latin America and the Caribbean, verifying a high heterogeneity in the dynamics of growth, ECLAC said.
The regional commission of the United Nations released its Economic Survey of Latin America and the Caribbean 2014 report, which downgraded the regional growth projection for this year delivered in April (2.7%).

The report indicated that observed in the last quarter of 2013 economic downturn continued in the first months of 2014, bringing the region score lower than last year (2.5%) growth. However, he warns that the gradual improvement in some of the world's major economies should allow a turnaround by the end of 2014.

"Macroeconomic policies need to take into account the specific vulnerabilities of countries. Certainly, in all cases it is important to increase investment and productivity, to ensure medium-term structural change equally. Both are key determinants for the economic sustainability of development, especially in the current climate challenges, "said Alicia Barcena, Executive Secretary of ECLAC, while presenting the document.

Regionally, growth in 2014 will be led by Panama, with a rise in gross domestic product (GDP) of 6.7%. We continue Bolivia (5.5%), Colombia, Dominican Republic, Ecuador and Nicaragua, with expansions of 5.0%.

It is expected that the Central American Isthmus plus Haiti and Dominican Republic will grow 4.4%, while South America will expand 1.8%, albeit with a wide diversity between countries. The Caribbean will grow by 2.0%, which implies a rise from 1.2% recorded in 2013.

The decrease in the estimated growth for 2014 responds to different factors, according to the country under study, the statement said. In the case of Argentina, whose GDP barely grow this year, and Venezuela, which would score a contraction of -0.5% -, the available data for the first months of the year reflect the impact of certain imbalances that had been manifested in the years.

In Chile and Peru, which will expand 3.0% and 4.8% respectively, low economic dynamism is linked to a lower level of investment and the slowdown in household consumption.
In Mexico a recovery in growth is expected (2.5% compared with 1.1% in 2013), although less than previously forecast rate (3%), while Brazil will show a lower growth of 1.4% compared with 2.5% last year.

According to the analysis of ECLAC, the resumption of economic growth in the United States will benefit Mexico and Central America, while the recovery in the UK and several economies in the euro zone will have a positive impact, especially in the Caribbean due to increased tourist arrivals.

Slower growth in China scheduled for 2014 is the main risk, says the report. The economies of the region specializing in the export of raw materials to the country could be affected if the Asian giant fails to maintain growth above 7%.

He adds that in the medium term it is expected that the region faces a less dynamic demand for its main exports and a rise in external financing.

The Economic Survey 2014 states that face the new scenario macroeconomic policies to manage the business cycle and those aimed at boosting growth in the longer term should be closely linked.

"Macroeconomic policy should be reoriented, seeking to create the conditions for sustained growth and productivity gains. This is necessary to promote an increase in investment (public and private) in infrastructure and promoting innovation and diversification ", says the report.