The Real Deal Miami

Analysts forecast slower growth for Latin American economies

Economies grew annually at nearly 5 percent from 2003 to 2010
November 24, 2014 05:15PM

Santiago, Chile

Santiago, Chile

Latin American economies grew at an annual rate of nearly 5 percent from 2003 to 2010, but analysts predict much slower growth in the future.

Initial forecasts expected an annual growth rate of 3 percent, but those estimates have been cut as new data comes in. Business Insider reports that the region’s economies will grow by only about 1.3 percent this year. In 2014, Chile and Peru have seen growth of two and three percent, respectively, which is half the rate of 2013. The World Bank and International Monetary Fund expect a slow recovery in 2015 with a projected growth rate of just 2.2 percent. Alejandro Werner, an IMF economist, expects growth rates to average at 2.7 percent over the next five years.

Multiple reasons are cited for the Latin American situation, including a substantial drop in commodity prices following slower growth from China, plus increased oil output from the U.S. affecting oil prices. Regionally, difficulty in calculating productivity rates has been cited  as obscuring larger structural problems. Poor education and a lack of investment in public transportation for workers are also seen as problems.

However, low borrowing costs present the region’s countries with an opportunity to invest in infrastructure and education. [Business Insider]Chris Guanche