UNITED NATIONS -- Economic growth in Latin America and the Caribbean declined this year, but is expected to improve over the next two years, according to a new U.N. report.
Growth slowed four-tenths of a percent to a pace of 2.6 percent in 2013. Based on promising signs of private consumption and manufacturing, the the region will see growth rates of 3.6 in 2014 and 4.1 percent in 2015, according to World Economic Situation and Prospects 2014, a report that launches in January.
Global economic growth has been in a two-year slump — a 2.1 percent growth rate for this year and 2.4 last year was down from 2.8 percent in 2011 — but should increase at a rate of 3.0 percent in 2014 and 3.3 percent in 2015, according to U.N. estimates.
Improvement in Latin America will depend on the region’s ability to strengthen global demand for exports and, more important, withstand geopolitical forces and address nagging domestic issues that can hold the region back, experts say.
“Wherever there are centers of tension, there are impacts to the economies,” said Shamshad Aktar, the assistant U.N. secretary general for economic development, referring to events in the Middle East that have been driving the price of oil.
In South America, where Brazil once enjoyed a sustained growth rate on the strength of its oil exports, growth has been subdued because of weak external demand, volatility in international capital flows and tightening monetary policy, the report says.
“There are no magic bullets to solve these problems overnight,” Aktar added.
Private consumption, however, has been a bright spot for many South American economies, according to the report. Growth in Mexico and Central America is expected to accelerate due to better performance of manufacturing exports and stable domestic demand.
Even the Caribbean, where economies are ailing from a slump in tourism, the U.N. outlook projects growth to strengthen.
But the region would do well to address regional violence and insecurity that cast a cloud of uncertainty for potential investors, said Sergio Vieira, a U.N. economic affairs officer who monitors Latin America.
“Violence has an impact on economic growth through several channels,” Vieira said. “Instead of channeling private and public spending to aspects of development, they are investing in security.”
In November, a U.N. panel of development experts cited regional violence as a major hindrance to growth that could, if not addressed, cause tremendous economic decline.
To support increases in the global growth rate, the U.N. is calling for international coordination of policies to address job recovery and world debt levels.