| | |  Business News | July 2009 
Mexico GDP May Shrink 7% This Year, UN Agency Says
 Sebastian Boyd - Bloomberg
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July 16, 2009
 |  | Recovery for Mexico will be difficult and highly complicated.
-Alicia Barcena |  | | |
Mexico’s economy will shrink 7 percent this year as gross domestic product for all of Latin America declines 1.9 percent, the United Nation’s Economic Commission for Latin America and the Caribbean said today.
In December, the organization had predicted region-wide growth of 1.9 percent for this year.
Latin American economies are suffering after trade dropped 38 percent from its peak last year, remittances from citizens living overseas fell and foreign investment dried up, the commission said. Economies may start to recover next year, though not enough to offset the increase in poverty and joblessness caused by the slump, said Alicia Barcena, the commission’s executive secretary.
“Mexico is the biggest concern in the region,” Barcena said. “It’s an economy that depends very heavily on exports to the U.S., it’s one of the countries with the biggest fall in remittances and it’s also being hit by swine flu. Recovery for Mexico will be difficult and highly complicated.”
The effects of swine flu may knock between 0.3 percent and 0.5 percent from Mexican GDP this year, she said.
Brazil’s GDP may shrink 0.8 percent this year and Chile’s by 1 percent, the commission said. Colombia may grow 0.6 percent and Argentina may expand by as much as 1.5 percent. Venezuela’s gross domestic product may expand 0.3 percent.
Economic Outlook
Next year will be better for the region. Mexico’s economy may expand 2.5 percent as Latin America grows 3.1 percent, the commission said. The economies of Brazil, Chile, Colombia and Venezuela may each expand 3.5 percent next year, it said.
Rising prices for commodities such as oil and copper and emergency spending by governments may help some regional economies this year. Exports from Latin America to China have already picked up from a low reached in February and March of this year, according to a graph published in the report.
As many as 3.4 million people may join the ranks of the unemployed this year because of the economic slump, eroding progress made in fighting poverty over the past six years, Barcena said.
Already 180 million people in the region live in poverty, she said. She urged international lenders such as the International Monetary Fund to make more money available to the poorest countries in the region.
“We cannot expect the world to quickly recover to previous levels of growth or commerce,” Barcena said. “A return to normality will be very slow and will take a very long time.”
To contact the reporter on this story: Sebastian Boyd in Santiago at sboyd9(at)bloomberg.net |
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