Washington, – The worsening of the forecasts in Mexico and Brazil, the two major economies of Latin America, and the deepening of the Venezuelan crisis will halt the development of the region, which will advance 1.4% in 2019, six tenths less than calculated by the International Monetary Fund (IMF) in January.
This is reflected in the report of “Global Economic Perspectives” of the IMF, presented today by its chief economist, Gita Gopinath, in the framework of the spring assembly held these days in Washington.
“The second half of 2018 in Latin America was weak and much of that is affecting 2019,” Gopinath said in a press conference, in which he reviewed the reasons that motivated the IMF to lower its forecasts for Mexico, Brazil and Venezuela.
According to the report, Mexico is now expected to advance 1.6% this year and 1.9% next, five and three tenths less than previously anticipated, due to the uncertainty that some policies of the new Administration led by President Andrés Manuel López Obrador.
“This has been the combination of several factors: a monetary policy that has been stricter than what was expected and the political uncertainty surrounding the new government, which has alienated foreign investment,” Gopinath observed.
For the deputy director of the Fund’s Research Department, Gian Maria Milesi-Ferretti, the trade tension between Mexico and the United States over the last two years “clearly” has also affected the reduction in their forecasts.
For its part, Brazil, the other major Latin American economy, will continue its “gradual recovery” with an expansion of 2.1% this year, four tenths less than expected, and 2.5% next, three more than estimated in January.
“The main priority in Brazil is to contain the increase in public debt while ensuring that the necessary social spending remains intact,” the IMF experts said in their analysis.
On the other hand, the economic collapse in Venezuela continues to worsen and the IMF expects GDP to fall by 25% in 2019, seven tenths more than predicted in January, due to the “great humanitarian crisis” the country is experiencing, according to Gopinath.
The IMF kept its inflation forecast at 10,000,000% for this year, the same calculation three months ago.
The index has already increased by 929.789% in 2018, according to the latest analysis of the multilateral institution.
The collapse in Venezuela “generates a significant drag on the projected growth for the region,” the Fund stressed in its report.
Oya Celasun, head of the IMF’s Research Department, who also participated in the press conference, pointed to the “collapse” of Venezuela’s oil production as one of the main reasons for its fall, in addition to the socioeconomic situation.
On Argentina, the financial institution changed last Friday the prospects of contraction until 1.2% for 2019, compared to 1.7% calculated three months ago, but worsened the prediction of inflation until 30% at the end of the year.
The IMF said that “the highest nominal wages, the increase in planned tariffs and the rise in inflation expectations” will result in an increase in the price level of 30% by the end of 2019, 10% higher than projected in the second review of the agency’s assistance program.
The report is released at the beginning of the spring assembly of the IMF and the World Bank (WB), which brings together the world economic leaders of its 189 member countries in the US capital and will continue until the weekend. (EFEUSA ).