Latin America Resilient: OECD Downgrades Global Growth


The week the OECD reduced its growth projections of the world economy due to “largely degraded prospects in several emerging countries”, particularly Brazil and India.

According to the report from the Organization for Economic Cooperation and Development (OECD), the Gross Domestic Product (GDP) will grow by 2.7% this year, 3.6% in 2014 and 3.9% in 2015. Previous estimates were 3.1% growth in 2013 and 4% in 2014.

In Brazil, the OECD forecasts growth of 2.5% in 2013 (compared with 2.9% in its May forecast) and 2.2% in 2014 (against 3.5%).

Brazil’s GDP had grown by 0.9% in 2012, leading the OECD to note that despite the worsening of the forecast, the Brazilian economy “is emerging from a period of slow growth and is in the process of expansion.”

In the case of India, the OECD forecasts growth of 3.4% in 2013 and 5.1% in 2014, with a strong degradation against forecasts in May (5.3% and 6.4% respectively) .

For China, the downward revision is much lower:7.7% in 2013 (versus 7.8%) and 8.2% in 2014 (8.4%).

The organization also provides a deceleration of the Chilean economy in the coming months due to falling domestic demand and a strong recovery of the economy of Mexico in 2014 and 2015.

Chile and Mexico are the only Latin American member of the OECD, an organization of 34 countries, mostly belonging to the developed world.

The OECD highlights a paradigm shift in the world : so far, “the impulses in emerging economies had positive effects in advanced countries”, hit by the global crisis, but now “the global economic environment could exert amp and strap transmission of negative shocks “from those countries.

The organization draws lessons from the storm currencies suffered several emerging at the prospect of the end of monetary stimulus policy in the United States.

If America does not get an agreement in early 2014 to raise the debt ceiling, and brutally forced to cut spending, it could plunge the country into a recession with a contraction of its GDP to -6.8%. According to the OECD, this would generate 5 million unemployed only in the countries of this organization.

In conclusion, the OECD predicts, in normal circumstances, a U.S. growth of 1.7% (2013) , 2.9% (2014) and 3.4% (2015), much higher than the euro area outlook , with 0.4%, 1% and 1.6% respectively.

In May 2013, the OECD declared its intention to open accession negotiations with Costa Rica in 2015.

Costa Rica News Site

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