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Spotlight: Latin America recovering from recession, needs to improve infrastructure, say experts

Xinhua, April 25, 2017 Adjust font size:

The economies in Latin America and the Caribbean region are gradually bouncing back from a regional recession, but to sustain growth they need to eliminate "structural bottlenecks" and improve "quality infrastructure," experts said Monday.

The statement was made as financial experts gathered in Washington from April 21 to 23 for the annual Spring Meetings of the International Monetary Fund (IMF) and the World Bank.

In his latest assessment of the Latin American region, Alejandro Werner, director of the IMF's Western Hemisphere Department, said, "The economies ... are slowly recovering from the regional recession in 2016," although risks remain ahead.

He cited both the internal factors like "corruption concerns in some countries and upcoming elections" and the external risks, such as "greater global policy uncertainty, a rising tide of economic nationalism in advanced economies and a potential tightening of global financial conditions."

However, with "medium-term growth projected to remain subdued at 2.6 percent, tackling structural bottlenecks is essential to supporting and raising medium-term growth" for Latin America, said Werner.

"Priorities include improving quality infrastructure and education, encouraging further female labor participation ... and enhancing the business environment and governance," he noted.

The IMF expert said Brazil, South America's biggest economy, buoyed by a bumper crop and higher iron ore prices, "is expected to return to positive (growth) territory in 2017."

In Argentina, "the economic recovery is expected to continue in 2017, driven by a rebound of private consumption" and an uptick in exports.

Argentina was slated to hold mid-term elections on Oct. 22 that will serve to gauge President Mauricio Macri's popularity and potential to run for the re-election for the 2019-2023 term.

While "Mexico's real GDP growth is expected to decelerate to 1.7 percent in 2017," largely due to the uncertainty about its future ties with the United States, it is expected to recover to reach 2 percent in 2018, according to IMF experts.

In the lead-up to the Spring Meetings, the World Bank echoed the IMF's projections of growth recovery in Latin America, saying "the region's average growth will turn positive this year."

In a press release, the bank said the GDP in the region "is expected to grow by 1.5 percent this year and 2.5 percent in 2018, putting an end to six years of an economic downturn, including recession over the past two years."

In an interview with Xinhua, Andres de Nichilo and Martin Dukart, two analysts from Argentine consulting group Asia Viewers, also said, "The region needs to modernize its infrastructure and logistics, and reduce transport costs, or it could run into the risk of obstructing greater productivity and development."

They noted that the China-proposed Asian Infrastructure Investment Bank (AIIB) is a potential key player in bolstering the infrastructure in Latin America and the Caribbean region.

The AIIB "is an essential agency for undertaking the large-scale infrastructure works that Latin American and Caribbean countries need," they said. Endi