translated from Spanish: 3 economic projections for Latin America in 2020 (and will it be a year as hard as 2019?)

2019 was not an easy year for Latin America and the rest of the world.
The three major drivers of regional growth, Brazil, Mexico and Argentina, had a difficult time and although, according to projections, things should improve this year, the landscape will remain very challenging.
The low economic growth adds to the political uncertainty that Latin America travels, as well as an international context marked by the slowdown.
At BBC Mundo we present some of the projections made by analysts and international bodies for 2020.
1. Low growth
If there’s one thing that’s repeated between the different forecasts for this year, it’s the word “disappointing.”
But that doesn’t mean 2020 will be worse than 2019. On the contrary, although the region’s growth will remain low, at least it will be slightly better than in 2019, according to reports from international bodies and analysts interviewed by BBC Mundo.
“After the rapid growth of high commodity prices, the region is at a low-performing stage,” Mundo Martín Rama, chief economist at the World Bank for Latin America and the Caribbean, tells BBC.
“The region is not only growing more slowly than other emerging markets, but also than much richer advanced economies.”
The World Bank and IMF project regional growth of 1.8%, while ECLAC anticipates 1.3% for the coming year. However, the World Bank forecasts a 2020 gross domestic product (GDP) hike of about 1.8%, a projection similar to that of the International Monetary Fund (IMF), albeit rather higher than that of the Economic Commission for Latin America and the Caribbean, which ECLAC, which anticipates an increase of just 1.3%.
With Argentina in crisis, Brazil emerging from recession, and Mexico with a stagnation scenario, Latin America’s three largest economies have failed to take off.
“It would be easy to attribute Latin America’s low growth only to external circumstances, but there are many internal reasons,” Rama says.
Several countries in the region reached a high level of public spending at the time of the commodity bonanza, he argues, which is now difficult to sustain.
“Countries have had to make tax adjustments of different types and it is difficult to grow with strong fiscal adjustment.”
In some cases, these adjustments have resulted in “turbulence that goes beyond the economic, which are more political,” he says.
And on the other hand, “the most disconcerting thing is that some of the countries that had the best performance, like Colombia and Chile, are also facing social tensions that challenge what can be done.”
The external scenario has also hit Latin America hard.According to ECLAC, 2020 Latin America will face an “extremely complex” economic and social context and a widespread slowdown.
“In addition to this scenario, there are growing social demands and pressures to reduce inequality and increase social inclusion that have detommed with unusual intensity in some countries in the region,” the agency said in a report released in December.
Large popular mobilizations have erupted in recent months, adding to low external aggregate demand and more fragile international financial markets.
Among the external factors, he adds, trade tensions, the global slowdown, as well as the drop in demand and commodity prices that are exported by many of the countries in the region, influence growth.
“We have reached a maximum in the number of unemployed of 25.2 million people. This is the most worrying part of what is happening in the economy,” said Alicia Bárcena, ECLAC’s executive secretary.
2. High political and economic uncertainty
The wave of protests that shook the region this year marked a turning point.
Although for very different reasons, in countries such as Ecuador, Chile, Colombia and Bolivia, people took to the streets to demonstrate against their governments.
The research team of the Economist Intelligence Unit refers to Latin America in its report “Where next and what next for Latin America?” as “the land of the pan”, for the leading role acquired this year by social movements.
“While there are very few things in common between the surveys in Chile and Ecuador,” for example, there are some “common threads” that connect the different situations of these two countries and the events that have occurred in the rest of the region, the report says.
Countries such as Ecuador, Chile, Colombia and Bolivia were the scene of massive protests in 2019.La most shared common experience, the report argues, has been “the arduous adaptation to the post-super cycle of the Commodities“, referring to the Boom which gave the region a major economic boost until 2013.
But as fiscal coffers began to empty, governments had to tighten their belts, applying austerity or caution measures in public spending in a context of economic stagnation.
That turned out to be “a toxic mix” that sparked social frustration and protests in the region.
With that view, the analyst team plans for 2020 “a high risk of contagion from protests.”
They also anticipate a “strong possibility that 2020 will be another volatile year for Latin America,” in a context in which this year’s demonstrations have been successful in seized concessions from governments.
Analysts project that the effects of social tensions will continue in 2020.In dialogue with BBC Mundo, Alberto Ramos, managing director for Latin America of investment and financial services bank Goldman Sachs, says the outlook for 2020 is not very Encouraging.
“Next year Latin America will have low growth, low inflation and low returns.”
With Venezuela in crisis, Argentina in recession, weak Mexico and Brazil growing a little over 2%, “there will be a modest improvement in the region, but nothing spectacular. Still a long way from what’s needed,” Ramos says.
The economist says regional economic growth over the past seven years has been very weak.
“That’s why there’s so much discontent in the region. Societies are getting tired because they haven’t seen economic or social progress in the last seven years,” he argues.
“And they don’t expect that reality to be better in the future. In addition, people do not trust political structures and have seen constant levels of corruption and impunity.”
Its forecast for 2020 is an economic growth of 1.7%.
“The perception of injustice in the distribution of wealth has increased,” the UN Human Development Report says. Other analyses on Latin America’s future project that instability will continue, mainly due to the concentration of resources.
The region “risks further social crises and political instability because of the inequality it drags,” warns the United Nations Development Programme (UNDP) Human Development Report (HDI).
This situation, he adds, has led to greater discontent from broad sectors that demand better access to basic services and better quality in education, health, transport and pensions.
“The perception of injustice in the distribution of wealth has increased,” the report warns.
3. The three big engines are going at a slow pace
The region’s three largest economies, Brazil, Mexico and Argentina, have been in trouble, but are gradually trying to turn the page and leave behind a 2019 full of complications.
Unlike other economists, Marcos Casarín of the British consultancy Oxford Economics has a certain degree of optimism, in the midst of a cloud-filled picture.
“I have a feeling that the worst was left behind,” World tells BBC.
“2020 will be better than last year, but it still won’t reach its potential.” (The research team’s regional growth projection is 1.5% growth)..
Oxford Economics projects that Mexico will have no recession. Brazil and Mexico, he explains, went through major political transitions, while Argentina returned to recession.
In the rest of the region, politics also took center stage in countries where people took to the streets to demonstrate.
Its projection is that there will be fewer major events in 2020, “especially in relation to domestic policy”.
And with less ShocksHe adds, “we hope that the growth will eventually pick up a little firmer.”
Brazil will grow faster than Mexico, but it is still not recovering from the recession years. By country, here are some of Oxford Economics’ forecasts:
Brazil to grow faster than Mexico for second year in a row
Mexico to escape recession and weight to stabilize
Argentina’s debt restructuring will involve cuts
Among the largest economies, Colombia will grow the fastest
Chile will not fall into recession, but weight to remain weak
Ecuador will remain linked to the International Monetary Fund despite opposition
Bolivian growth will be less than 4%
Although 2020 will be less tough than 2019, forecasts indicate that Argentina will remain in recession. Another major British consultancy, Capital Economics, also foresees that there will be a regional recovery by 2020, “but not as strong as many think.”
The research team projects growth of only 1.3%.
Here are some of his forecasts for next year:
Political risk will remain high. The economic impact of the 2019 changes and political events is likely to continue in 2020.
Mexico will only grow by just about 0.5% and interest rates won’t fall as much as many expect
Argentina will impose sharp reductions in payments to private creditors. The debt restructuring plan is “unrealistic.”
Brazil will grow more than this year, but that is not enough to guarantee a rise in interest rates. And political risk is likely to increase by 2020.
The research team of the British consultancy Capital Economics projects growth of only 1.3% for the region. While forecasts are generally not particularly optimistic, if there is one thing everyone agrees on, it will not be harder than 2019.
And that, at least, is still a little light in the midst of the shadows.

Original source in Spanish

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