IMF: 2016 a year of great challenges
ECONOMIES IN LATIN AMERICA and the Caribbean will contract this year before returning to growth in 2017.
The International Monetary Fund (IMF), in its latest World Economic Outlook (WEO) Update released last week, also said that “the pickup in global growth is weak and uneven across economies, with risks now tilted toward the emering markets”.
“Aggregate GDP in Latin America and the Caribbean is now projected to contract in 2016 as well, albeit at a smaller rate than in 2015, despite positive growth in most coutries in the region. This reflects the recession in Brazil and other countries in economic distress,” it said.
It is estimated that Latin America and the Caribbean economies grew by 1.3 per cent in 2014, contracted by 0.3 per cent last year, would decline by a similar figure this year, before growig by 1.6 per cent in 2017.
The IMF also said “advanced economies will see a modest recovery, while emerging market and developing economies face the new reality of slower growth”. Its WEO Update now projects global growth at 3.4 per cent this year and 3.6 per cent in 2017, slightly lower than the forecast issued in October 2015.
“This coming year is going to be a year of great challenges and policymakers should be thinking about short-term resilience and the ways they can bolster it, but also about the longer term growth prospects,” said Maurice Obstfeld, IMF economic counsellor and director of research.
“Those long-term actions,” he continued, “will actually have positive effects in the short run by increasing confidence and increasing people’s faith in the future.”
Growth in advanced economies is projected to rise to 2.1 per cent and to hold steady in 2017, a slightly weaker pickup than that forecast in October, the IMF said. It added that “overall activity remais robust in the United States, supported by still easy financial institutions and strengthening housing and labour markets”.
“But there are also challenges stemming from the strength of the dollar, which is causing the US manufacturing sector to shrink marginally. In the euro area, stronger private consumption supported by lower oil prices and easy financial conditions is outweighing a weakening of net exports,” it noted. (SC)