Latam to Resume Moderate Growth in 2017 but Important Risks Plague Outlook
The Latin American economy is expected to recover modestly in 2017, though the outlook is plagued with risks that are causing a downward bias in analysts’ growth forecasts, according to FocusEconomics’ latest survey of 150 leading economic institutions.
Economists forecast Latin America’s GDP to increase 1.6% in 2017, which has been revised down from the 1.8% projected last month. Economic data was stubbornly weak across the region in 2016 and growing uncertainty surrounding the global outlook in the aftermath of Donald Trump’s victory is weighing on sentiment, fueling concerns over the trajectory of the recovery in 2018.
Click on the image to open a larger version
“The prospect that a Trump Presidency might be both protectionist and in favor of a substantial fiscal expansion has altered expectations for U.S. monetary policy. Therefore, weakness is looming on the horizon for several currencies in the region, raising risks of a further tightening of monetary policy across the board,” says Ricardo Aceves, Senior Analyst and Latin America expert at FocusEconomics.
Looking at the countries in the region, economists made sizeable cuts to the 2017 GDP growth forecasts for Brazil, Ecuador, Mexico and Venezuela, which together represent a big portion of the region’s economy. Paraguay was the only economy for which economists raised their forecasts.
BRAZIL: High unemployment, tight credit conditions, political turmoil and weak external demand kept Brazil’s economy in the worst recession in modern history last year. While signs of stabilization have emerged, activity is meagre and gains are uneven. After an expected 3.4% contraction in GDP last year, the economy should return to growth in 2017 but activity will be weak. Analysts see GDP growth at 0.6% in 2017, which is down 0.2% from last month’s forecast. The recovery is seen gaining speed in 2018 and GDP should increase 2.2%.
MEXICO: Mexico is by far the economy in Latin America most exposed to risks from the U.S., given the strongly integrated trade and manufacturing cycle links to its northern neighbor. At the same time, December’s fall in the manufacturing PMIs gives little hope of stronger GDP growth in Q4, following a slowdown in Q3. Adding to the bad news for the manufacturing sector, carmakers are feeling the pressure coming from Trump’s threats to impose tariffs on vehicles assembled in Mexico and exported to the U.S.
With fears that Trump’s protectionist agenda will wreak havoc on Mexico’s economy, the outlook is becoming gloomier. Analysts expect the economy to decelerate to 1.8% growth in 2017, which is down 0.2% from last month’s projection, after an estimated 2.1% growth in 2016. For 2018, GDP is forecast to increase 2.3%.
COLOMBIA: In Q3, the Colombian economy recorded its worst performance since the height of the global financial crisis in 2009. The latest monthly data sent mixed signals of the economy in Q4, which suggests that the economy was still in bad shape at the close of 2016. Nevertheless, higher oil prices following the OPEC output freeze coupled with increased infrastructure spending should provide a boost to Colombia’s economy this year. Analysts expect the GDP growth of 2.4% in 2017, which is unchanged from last month’s forecast. For 2018, the FocusEconomics panel projects the economy to expand 3.1%.
ARGENTINA: Although Argentina will return to growth this year thanks to a combination of higher real wages, improved business sentiment and stronger regional growth, spillovers from the government’s tough economic reforms are casting doubts about how strong the economic recovery will be. Analysts foresee the economy expanding 3.0% this year, which is unchanged from last month’s estimate. Next year, the panel sees GDP growth at 3.1%.
Date: January 18, 2017
TagsPrecious Metals Commodities USA Australia China Major Economies Company News Commodities TPP United Kingdom Nordic Economies Canada Forex Oil European Union Greece UK Bitcoin France Base Metals Commodities Healthcare Agricultural Commodities Eastern Europe Asia OPEC Japan Banking Sector Turkey Tunisia Vietnam Cryptocurrency Consensus Forecast Euro Area Iran Portugal Sub-Saharan Africa Brexit Unemployment rate Gold Exchange Rate Spain MENA Argentina Brazil Economic Growth (GDP) Germany Venezuela Colombia Latin America G7 Emerging Markets Italy Africa United States Mexico IMF Investment oil prices Infographic Energy Commodities South Africa Trade India Ukraine Housing Market precious metals Inflation Russia
The most recent estimates suggest that the Angolan economy is getting back on its feet. Read more: https://t.co/E1QrCcf8pe
10 hours ago
India is projected to grow 7.3% in FY 2018 and 7.4% in FY 2019. https://t.co/JNeqoY4fcN
11 hours ago
How will general elections in Malaysia affect the economy in 2018? Find out: https://t.co/wxJTHWfmrk
12 hours ago
Incoming economic data remains largely encouraging in India. Read our latest economic outlook for India here:… https://t.co/WRPhonAiNx
12 hours ago
Tighter monetary stance and ebbing Chinese demand to cause growth to moderate in Malaysia this year. Read more: https://t.co/wxJTHWfmrk
13 hours ago
- What the TPP means for trade in Latin America
- Elections in Russia: Analysis and Implications
- How Student Loan Debt Affects the Economy
- 2018 & 2019 Economic Outlook for the Top Oil Producing Countries
- Nearly a Third of Latin Americans Have No Right to a Pension
- A Look at Healthcare Models Around the World
- The Poorest Countries in the World
- Newly-elected Chilean President Sebastian Piñera faces a myriad of challenges - economic and otherwise
- The Economic Effects of Trade Protectionism
- Regional Disparity: The Dark Side of Inequality in Latin America
- Coal: The story of the world's most abundant fossil fuel
- Gold: The Most Precious of Metals (Part 3)
- Venezuela's Electoral Conundrum
- Trump's 1st Year: 95 Analysts Surveyed on U.S. Economy
- The Latest on China and What's in Store for 2018
- An in-depth look at the Eurozone’s booming economy and the challenges that lurk in the shadows
- China’s growing influence on the Latin American economy
- Top Economics & Finance Blogs of 2018
- How Latin America emerged from recession in 2017
- Is this the beginning of the end for Bitcoin?
- Risks and Opportunities for 2018 - Daniel Lacalle
- Emerging Markets 2018 Economic Outlook
- The role of FDI in Vietnam’s socio-economic development
- Increasing poverty in Latin America takes a breather thanks to improving economic dynamics
- What will be the most miserable economies in 2018?
- The World's Top 10 Largest Economies
- Is Spain doing enough to address its high youth unemployment rate?
- Has Latin America gone far enough in reducing barriers to international trade?
- Commodities Outlook: Oil, Natural Gas, Coal, Lead & Tin
- 21 experts tell us what the future looks like for cryptocurrencies and blockchain
- Turkish lira plummets to all-time low on Erdogan’s monetary feud and tense U.S.-Turkey relations
- Copper: The first metal mastered by man
- The Mercosur-EU Free Trade Agreement: Obstacles & Opportunities
- Nigerian Economy Still Treading Water Thanks to Oil Sector
- Elections in Chile: What the results could mean for the economy
- QE’s Untold Story: A Chart That Fed Correspondents Need To Investigate
- Holland’s fragile one-seat majority government targets economic growth at the expense of fiscal sustainability
- South Africa: Economy at a tipping point?
- Latin American Commodities: What’s behind the increase in demand and prices?
- Is the UK really "shackled to a corpse"?
- Spain-Catalonia: 7 economic experts weigh in on how the situation will affect the outlook
- How well is Spain's labor market doing since the crisis?
- Which countries will have the highest and lowest inflation in 2017?
- How vulnerable is Latin America to economic crises today?
- Iron ore facts and common questions answered
- The bulging economic costs of obesity
- How much investment is needed to salvage Latin America’s crumbling infrastructure?
- A Look at the Potential Impact of Brexit on the Dutch Economy
- Emerging Markets Are Kicking Into Higher Gear In 2017
- Why is foreign direct investment in Latin America falling again?
- Are Central Banks Nationalising the Economy?
- Bounty or burden? The impact of refugees on European economies is far from clear
- What’s the future of U.S.-Latin America trade relations?
- Taxes or cutbacks? Latin America's challenge of sustaining spending without causing debt to skyrocket
- Are uranium prices making a comeback?
- Taxing the Economy: Achieving a Delicate Balance
- How will Latin America’s upcoming lengthy election cycle affect the reform agenda and credit ratings?
- How will emerging market economies perform in 2017?
- Chilean Economy in Focus: Interview with Senior Economist of the Chamber of Commerce of Santiago
- CEOs Rank Top Economies for Growth Opportunities
- The Mobile Ecosystem & Latin America's Economy
- Prospects and Challenges for the Global Economy: Interview with Tim Cooper from BMI Research
- How will the Fed reduce its balance sheet & and how will the ECB end QE? - 19 economic experts weigh in
- Thoughts on "unwinding" QE from Frances Coppola
- The Fed and ECB at a crossroads: Unwinding QE
- Spain: The economy that continues to silence the critics
- Latin America: The Most Unequal Region in the World
- The History of OPEC: Has it been a Success?
- FocusEconomics Announces 2017 Analyst Forecast Awards Winners
- Latin America’s rising unemployment bucks nearly decade long trend
- Escape from the Central Bank Trap by Daniel Lacalle
- China's economic rebalancing act: What to look out for in 2017
- Driving Growth in Latin America: Challenges & Priorities
- Is the Global Economy Rebalancing?
- Commodity exporters face challenging times
- Recent Global Events Facilitate Mercosur-Pacific Alliance
- 23 economic experts weigh in: Why is productivity growth so low?
- Mexico's outlook as Trump nears 100-day mark
- Interview with Oxford Economics Senior Economist on implications of the possible outcomes of the French Presidential Election
- The anxiety of the small saver in a world of negative interest rates
- Brexit negotiations. Between Uncertainty and Urgency
- An Economic History of the EU from El Blog Salmón
- Baby Boomin': Implications of high population growth in Latin America
- Survey of International Economists Predicts a Le Pen Defeat in French Elections, Says Macron has Best Economic Plan
- Spain in a global context: developed economy with some challenges
- How much is crime costing Latin America?
- Predictions & Estimates from Economist Daniel Lacalle
- What economy will the new Dutch government inherit?
- “The data is not a true reflection of reality in India” Interview with Société Générale India Economist
- What are the prospects for Emerging Economies in 2017?
- What to expect in Asia for 2017
- Top Economics & Finance Blogs of 2017
- Latam to Resume Moderate Growth in 2017 but Important Risks Plague Outlook
- 4 Key European Elections That Will Impact the Economy in 2017
- How are security concerns and political chaos affecting Turkey’s economy?
- Global growth to edge up in 2017
- Set to breach targets again? Debt and deficit outlooks for Southern European Eurozone countries in 2016 & 2017
- What does Donald Trump mean for the U.S. economy?
- How will emerging markets perform in 2017?
- The economic impact of a break in U.S.-Philippines ties
- Trump election: Base metals surge due to infrastructure plan
- 5 updates on the Venezuelan economic crisis
- Canada: When your neighbor’s house is on fire…
- Short-term pain before long-term gain? A look at French labor reform and economic growth
- Asia: Unremarkable growth & unfulfilled promises?
- How India's latest monsoon is affecting the economy
- Innovation in Latin America: Potential Goes Untapped Due to Weak Economic Conditions
- Russian economy update in wake of OPEC deal announcement
- The Wisdom of the Crowds and the Consensus Forecast
- Can the peso predict the U.S. election results?
- There's no end in sight to the Venezuela crisis
- A Look at the European Union Political Calendar
- Survey of international economists shows uncertainty surrounding elections damaging U.S. growth prospects
- FocusEconomics partners with leading online statistics provider Statista
- China: Recent postive economic data may be papering over the cracks
- Sub-Saharan Africa's 2016 & 2017 growth rates
- The Italian Dilemma: Weak banks pose risk to already faltering domestic demand
- How much money do migrants from Latin America send home?
- The U.S.' (Not So) Mysterious Case of the Missing Men
- What to expect from the G20 economies by 2020
- The Pain in Spain: Robust GDP growth cannot mask the persistent structural deficit