The Inter-American Development Bank (IDB) says a combination of economic shocks could lower growth in Latin America and the Caribbean by an annual average of up to 1.7 per cent in 2019-2021 of gross domestic product (GDP).
In its macroeconomic report released in Washington DC, the IDB said that the new projections bring the baseline growth rate from 2.5 to just 0.8 per cent.
The report, titled “Building Opportunities for Growth in a Challenging World,” calculates the impacts of slower growth in the United States and Chinese economies, plus a rise in US interest rates.
It also calculates potential impacts on Latin America and the Caribbean caused by a disorderly Brexit -the UK exiting the European Union without an agreement in place, which could trim an additional half a percentage point from the region’s growth projections.
“The potential impacts are of concern because Latin America and the Caribbean is already one of the regions with the slowest annual growth rates in the world,” said IDB Chief Economist Eric Parrado.
“We are hopeful that some of worst-case scenarios may be averted, and the report charts a course for the region to obtain a big growth boost by investing in much-needed transport, telecommunications and other infrastructure.”
The IDB calculations are based on a statistical model and the report includes a section on how countries can close the infrastructure gap.