Entity also worsened projection for the advance of Latin America and the Caribbean, citing an uncertain and volatile international context
The Economic Commission for Latin America and the Caribbean (ECLAC) has revised downward its projection for growth of the Brazilian economy in 2018. According to a report released on Thursday (23), the entity estimates that the country’s GDP will advance 1.6 % this year, down from 2.2% in April .
The worsening of Brazil’s projection, along with the revisions to the economies of Argentina and Venezuela, also helped to worsen the growth forecast for the Latin American and Caribbean economy.
The estimate has gone from the previously projected 2.2% to a 1.5% advance. The study also cited an international context “marked by uncertainty and volatility” to justify the worsening.
For Venezuela, which is facing a serious political and economic crisis, ECLAC has further increased its forecast for this year’s GDP, from 8.5% to 12%. Argentina, meanwhile, is expected to spiral by 0.3 percent contraction in 2018.
Trade conflicts and currency devaluation
According to ECLAC, regional growth takes place amidst a complex scenario, citing trade conflicts between the United States, China and other powers.
The agency also cites increased geopolitical risks, declining capital flows to emerging markets, and increased risk levels in the country’s credit ratings to pre-empt the deterioration of Latin America and the Caribbean in 2018.
Another phenomenon that weighed, according to the study, was the “generalized” devaluation of local currencies against the dollar. The steep increases in interest rates in the United States should also have an effect on the funds invested in these emerging countries, ECLAC notes.