SANTIAGO, Chile – Facing uncertainty about the future of the world economy and slower growth in developed nations, the United National lowered its projected growth forecast in Latin America.
The UN projected the economies of Latin America and the Caribbean will grow by 3.5 percent this year, a .3 percent drop from prior estimates. It was lowered from an earlier 3.8 percent view because of "a recovery that has been less dynamic than expected" in Argentina and Brazil, said the UN's Economic Commission for Latin America and the Caribbean.
Growth in the two South American powerhouses are still expected to help the region's expansion, with a projected 3.5 percent for Argentina and 3 percent in Brazil on the back of improved agricultural activity and investment, the report added.
The UN agency known as ECLAC said the regional expansion will be backed by consumer growth as a result of better labor indicators, the rise of banking credit and investment.
"On top of this, there are high prices for commodities. Although they're expected to be lower compared to 2012, they will be kept at high levels," the Santiago-based agency said in a statement.
Brazil is a top producer of soft commodities like orange juice and coffee, the world's biggest beef exporter and the No.2 producer and exporter of soybeans. Argentina is a global top exporter of soy meal and soy oil and the No. 3 exporter of the bean.
"South American countries, which generally are more specialized in the production and export of commodities, will grow on average 3.5 percent in 2013 thanks to the preservation of growth in Asian economies," ECLAC said. "This will bring positive economic outcomes both for the level of income as well as exporting activities."
Growth in the export-dependent region will be led by Paraguay. The world's No. 4 soy exporter is seen expanding by 10 percent, followed by Panama's 8 percent and Peru and Haiti's 6 percent growth this year. Chile, Bolivia and Nicaragua will expand by 5 percent. Colombia will clock 4.5 percent growth and Uruguay will grow by 3.8 percent, ECLAC said.
Mexico, Central America and the Caribbean, will benefit from "more dynamism in the United States. A stronger agricultural sector will benefit Cuba, Nicaragua and Dominican Republic, while improvements in construction sector will lift Guatemala, Honduras and Haiti.
"In the Caribbean the acceleration in the growth rhythm will continue with a rise of 2 percent as a result of dynamism in economies specialized in the production and export of raw materials, mainly Guyana and Suriname," ECLAC said. Growth also will be boosted in tourism-dependent Caribbean nations with an improved economic outlook in the United States.
The ECLAC also scaled back its 2012 forecast to 3.0 percent from an earlier view of 3.1 percent due to a slower global expansion hit by a recession in Europe, a slowdown in China and sluggish U.S. growth.
Based on reporting by The Associated Press.