(VOVworld)- Latin America’s economy went through a hard time in 2016 casting a shadow on the region’s economy next year.
The regional economy saw negative growth in early 2016 with GDP falling 0.9% in the third quarter. The UN Economic Commission for Latin America and the Caribbean expects an average contraction of -0.9% for the entire region again this year meaning consecutive years of negative growth for the first time in 2 decades. The declining economy has increased the unemployment rate in the region to 8.1%, the highest in a decade.
The most significant declines were in the Brazilian, Venezuelan, and Argentinean economies. After growing strongly for a decade, Brazil, Latin America’s biggest and the world’s 7th largest economy is no longer a giant among the world’s emerging economies having experienced its worst recession since 1930. Brazil’s economy is projected to shrink 3.5% this year. Brazil is struggling with a huge budget deficit, declining consumer spending, an unemployment rate of 6.9%, a monetary devaluation of 50%, and public debt equivalent to 65% of GDP.
Venezuela is also struggling with political and economic difficulties. The fall and slow recovery of oil prices has plunged Venezuela into a serious economic crisis while the same time, it is in the throes of a political crisis. Venezuela’s economy is forecast to shrink for a 3rd consecutive year, losing 11.3% this year.
Ecuador, which was seriously shaken by an April earthquake, is facing numerous problems caused by falling oil prices. Argentina’s economy is projected to contract 2.3% this year although Argentinean leaders predict a decline of just 1.5%. A negative projection has also been made for Colombia.
In 2017, Panama and Dominica are forecast to post growth rates of 6.4% and 5.2% respectively. The 5.3 billion USD expansion of the Panama Canal has given a boost to central America, Mexico and Peru where there is still a high foreign investment level.