The International Monetary Fund (IMF) has predicted that the downward spiral in economic growth for countries in Latin America and the Caribbean (LAC), which started some six months ago, will continue into the year 2020.
This was the consensus coming out of the 2019 IMF Regional and Economic Report presented last Tuesday at the Central Bank of Barbados as it pertains to countries in Latin America and the Caribbean
Addressing delegates that included journalists from across the region, Assam Husain, Deputy Director for the IMF Western Hemisphere Department said taking all the variables into consideration, it can be confirmed that the global and regional growth outlook for the current period is weaker than it was six months ago, He noted that while there are some positives signs, for 2020 however it would be significantly weaker than it was six months ago.
Austin noted that what is noticeable among the LAC countries; downside risk related to the external environment, domestic policy and uncertainty, particularly by the larger economies of the region, including natural disasters, continue to dominate.
The IMF Deputy Director said the key medium-term challenge for countries of the region continues to be lagging productivity, which requires addressing; the key structure responsible for growth in just about every country.
Addressing the issues in the short to medium term, Husain said countries need to strike a balance between rebuilding policy space and supporting growth, any movement he said would depend on how much policy space is left. In the medium term, he said the main issue would be how to accelerate structural reform that will boost the potential for inclusive growth.
Husain said global economic growth decline showed a movement from 3.6 % in 2018 to 3.0 % in 2019 the slowest pace since the global financial crisis in 2008/09, with a predicted recovery of 3.4 % expected in 2020.
Husain said commodity prices, which are crucial for any country in the region especially energy and metals are projected to decline with a modest negative impact on economic growth.
Taking all things into consideration Husain said global growth prospect in Latin America and the Caribbean is projected at 0.2 % with the forward movement of 1.8% in 2020. The IMF official said the only bright spot for economic growth for the region in Guyana and this he attributes to the coming on stream of the oil boom expected early in 2020.
Given the challenging external environment, any growth in 2020 he said, is expected to be driven by private consumption and investment which they expect would be anchored by a rebound in business and consumer confidence. He noted that job creation; wage growth and domestic financial condition are not expected to boost private consumption and investment.
Husain went on to say that the humanitarian crisis in Venezuela is also a major contributor to the negative economic growth in the region and this he said must be given special attention if the downward spiral in economic growth needs to be addressed.
Also addressing the Tuesday’s gathering was Bert Van Selm, Deputy Division Chief for Caribbean Division for the IMF Western Hemisphere Department and according to him, except Guyana, growth for the region in 2020 is not going to be anything special. Bert attributes one of the main challenges facing Caribbean countries to public debts. He added that while this problem might be of some vintage, it has been on the increase for most countries for the region, he, however, he applauded Grenada, Jamaica and Barbados; three countries he said that have shown encouraging signs, having demonstrated the technical skills by implementing strategies to reduce public debts. He is of the view that other countries should take a page from these success stories in dealing with their challenges.
Bert said the Caribbean Tourism Intensive Economy, has underperformed other groups of economies worldwide, this he attributes to high crime, outward migration and high cost of energy, he is the view that the region must address these issues to tackle the problem of economic growth and getting out of public debts.