How Latin America emerged from recession in 2017
After two years of economic contraction, Latin America and the Caribbean have begun to recover, thanks primarily to private consumption. The region’s economy contracted in 2016, but grew 0.9% in 2017, a positive result although it was nowhere near the global growth rate of over 3%. The World Bank’s foresees regional growth doubling this year and hitting 2.6% in 2019, which would be more inline with the global growth rate. The FocusEconomics Consensus Forecast poll of hundreds of analysts worldwide foresees growth in Latin America coming in at 2.4% in 2018 and projects an improvement to 2.7% in 2019.
Brazil was the main driver behind the region’s growth in 2017, with GDP coming in near 1% after two years of a tough economic recession. Behind the recovery was an improvement in private consumption, retail trade, industrial production and in labor market conditions. The other country that contributed greatly to the region’s recovery was Argentina, which saw economic growth of close to 3% in 2017 following a recession in 2016 thanks to investment dynamism and an increase in private consumption. Brazil and Argentina were just two of the five countries that escaped recession last year. That said, their contribution was offset by Venezuela’s double-digit economic decline. In fact, Venezuela and Trinidad & Tobago were the only two Latin American economies that remained in the red in 2017. On the bright side, Panama saw the fastest economic expansion at 5.5% growth, followed by Nicaragua, the Dominican Republic, Honduras, Bolivia and Costa Rica.
The Mexican economy, on the other hand, while growing less than the previous two years, expanded by around two points in 2017, thanks to consumption and good labor market conditions. Several Caribbean countries suffered damage to their infrastructure and a reduction in tourism due to strong hurricanes, which caused a slowdown in economic growth during the second half of the year.
Although 2017 results were generally positive, a reduction production in extractive industries in several commodity-exporting countries limited growth. In Colombia, a moderation in oil prices negatively affected the economy, while in Chile, mining production fell significantly due to strikes at the beginning of the year. Flood damage in Peru limited the economic expansion last year. On the other hand, political uncertainty, while negatively affecting countries such as Chile and Peru, did not have much influence on Brazil, which had already experienced a deeper political crisis.
Last year kicked off a return to growth for the Latin American and Caribbean economy. FocusEconomics Consensus Forecasts foresee growth in the double digits this year and growth nearing 3% next year. The World Bank projects 2% growth in 2018 and in the following two years. A variety of factors are behind analysts’ more optimist forecasts: stronger consumption, private investment growth and an improvement of export conditions, especially in commodity-producing countries.
But beyond the good omens, according to the World Bank report, the evolution of the Latin American economy presents certain risks. First, the political uncertainty that still affects countries such as Brazil, Peru and Guatemala. Second, the risk of an increase in international financial market instability. Third, a heightened fiscal deficit in certain countries. And finally, President Trump’s protectionist agenda and the possible elimination of the North American Free Trade Agreement (NAFTA).
*Guest blog post from Latinoamerica21
Jeronimo Giorgi, a Uruguayan journalist dedicated to international issues, is pursuing a master's degree in Latin American Studies. He has collaborated with various media outlets in Latin America and Europe, and has received distinctions such as the Premio Rey de España for Journalism.
Latinoamerica21 is a blog about current economic, political and social topics in Latin America that is currently published within the newspaper El Observador de Uruguay and Pagina Siete in Bolivia, and will soon be published in other media outlets within the region. The original version of this blog post is available in Spanish: Este año la economía de América Latina crecerá el doble que en 2017.
*Guest blog posts do not reflect the views of FocusEconomics.
5-year economic forecasts on 30+ economic indicators for 127 countries & 33 commodities.
Date: January 24, 2018
TagsEmerging Markets Investment Healthcare IMF Russia Housing Market precious metals Eurozone Canada Agricultural Commodities Unemployment rate TPP Oil Consensus Forecast Commodities Venezuela Colombia Japan OPEC France Tunisia India Nordic Economies G7 UK Economic Growth (GDP) Precious Metals Commodities Cryptocurrency Major Economies USA MENA Vietnam Inflation Iran Germany Mexico Trade Base Metals Commodities Sub-Saharan Africa Company News Gold Australia Argentina United Kingdom Energy Commodities Eastern Europe Exchange Rate Africa Greece Euro Area Forex Ukraine Latin America European Union Infographic Brazil Asia Bitcoin Portugal Spain Turkey Brexit Banking Sector United States China oil prices Italy South Africa
Analysts see base metal prices rising 7.6% year-on-year in Q4 2019 (last month: +6.2% yoy). Read more: https://t.co/KlgaC9IbxP
9 hours ago
The Guatemalan economy is projected to expand 3.1% in 2019 and 3.0% in 2020. Read more: https://t.co/JdM2ep1Com
11 hours ago
Argentina's inflation is expected to be 29.0% at the end of 2019, which is up 1.2 percentage points from last month… https://t.co/6Z6z1lcdgY
13 hours ago
GDP in Brazil is seen growing 2.4% in 2019, which is up 0.1 percentage points from last month's forecast, and expan… https://t.co/hHt506suN2
13 hours ago
Agricultural prices are expected to increase 5.6% year-on-year in Q4 2019 on solid food demand thanks to the world'… https://t.co/rBF0qJ4clw
15 hours ago
- Canada in 2019: Interview with a Top Economic Forecaster
- Pound Sterling 2019 Exchange Rate: Projections from Leading Analysts
- Expectations for Latin America’s Economy in 2019
- Ethiopia and Rwanda: From Destruction to Development
- Key commodities trends to look out for in 2019
- What drove Gulf neighbors to bail out Bahrain?
- The Four Financial Bubbles and Their Impact on the U.S. Economy
- The Poorest Countries in the World
- Italy: The sick man of Europe
- What does Bolsonaro's presidential win mean for Brazil's economic outlook?
- The World's Top 10 Largest Economies
- In Latin America, taxpayers are tapped to shoulder the burden of a bank bailout
- How and when will the next financial crisis happen? - 26 experts weigh in
- China and Africa: A partnership under the spotlight
- The conditions are ripe for a Global Financial Crisis 2.0
- Uncertainty, instability and fear haunt a generation of Argentinians
- 5 things: What to expect for Mexico's economy in 2019
- 5 things: Brazil's economic downturn and what to expect going forward
- Emerging Market Currency Crisis: Everything you need to know
- Which ASEAN countries are most exposed in the event of a U.S.-China trade war?
- 75 Top Economics Influencers to Follow
- Emerging Markets Economic Outlook 2018 and 2019
- The Faces Behind Latin America’s Key Institutions
- 2019 Economic Outlook for the Top Oil Producing Countries
- Is your cup of coffee about to get more expensive going in to 2019?
- The Economic Implications of an Aging Global Population
- Railway Mania: The Largest Speculative Bubble You’ve Never Heard Of
- Can the Wisdom of the Crowds predict the results of the 2018 World Cup?
- From Riches to Rags: Have Cryptocurrencies Crashed for Good?
- Investment looks to Latin America, but forecasts are not encouraging
- Turkey: Erdogan has cemented his grip on power - now what about the economy?
- How can Latin America’s business environment benefit from technological change?
- Mexico: A look at the past, present and future as elections yield AMLO victory
- Italy’s New Populist Government and the Eurozone: Prelude to a Crisis?
- Latin America moves toward increased integration as U.S. protectionism grows
- How can Latin America increase productivity without affecting the quality of employment?
- How will Saudi Arabia's economy benefit from lifting the women's driving ban?
- Which countries are the most prepared for the upcoming digital revolution?
- India Under Pressure from the U.S. on Trade Policy
- The Story of Steel
- Latin America is the World Leader in eCommerce Growth Despite Serious Challenges
- What the TPP means for trade in Latin America
- Elections in Russia: Analysis and Implications
- Nearly a Third of Latin Americans Have No Right to a Pension
- A Look at Healthcare Models Around 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
- Increasing poverty in Latin America takes a breather thanks to improving economic dynamics
- What will be the most miserable economies in 2018?
- 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