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UPDATE 3-UN lowers 2013 Latam growth view, sees pick-up vs 2012
December 11, 2012 / 4:21 PM / 5 years ago

UPDATE 3-UN lowers 2013 Latam growth view, sees pick-up vs 2012

* Region seen growing 3.8 pct from earlier 4.0 pct view
    * ECLAC also lowers 2012 f'cast to 3.1 pct from earlier 3.2
    * Brazil, Argentina, domestic demand seen boosting growth
    * Mexico 2013 growth outlook downwardly revised
    * Region largely defying global slowdown, but risks loom

 (Adds comments from ECLAC's head)
    By Anthony Esposito
    SANTIAGO, Dec 11 (Reuters) - The economy of Latin America
and the Caribbean will likely grow by 3.8 percent in 2013, less
than previously forecast, as slower growth in Mexico weighs
against a recovery in Brazil, Argentina and the region's brisk
domestic demand, the United Nations said on Tuesday.
    Next year's growth forecast was also scaled back due to
uncertainty surrounding the U.S. "fiscal cliff" - a combination
of steep tax hikes and deep spending cuts kicks set to start
kicking in next month unless Congress steps in - and the euro
zone's ongoing debt crisis.
    Either way, the export-dependent region's growth is seen
picking up pace from a downwardly-revised 3.1 percent expansion
this year, largely defying fallout from softer demand from key
trade partner China and lingering euro zone debt woes. 
    If next year's forecast holds, it will be the first time the
region's annual growth rate has quickened since 2010.
    The United Nations Economic Commission for Latin America and
the Caribbean (ECLAC) had forecast in October the region would
grow 4.0 percent in 2013. 
    Regional growth projections for next year were cut
"basically because of Mexico, but also because there are a lot
of uncertainties. And our region, to some degree, continues to
depend on external demand," the head of ECLAC, Alicia Barcena,
told Reuters on the sidelines of a press conference to present
the new forecasts.
    "As long as the fiscal cliff isn't resolved and the euro
zone's problems aren't fixed, they are going to continue to
create uncertainty," Barcena added.
    Next year's fresh regional growth outlook was dragged down
by a downwardly-revised projection for Mexico, the region's No.2
economy. Global woes and possible fallout from the fiscal cliff
are seen curbing Mexico's economic growth to 3.5 percent next
year, down from a previous forecast of 4 percent growth and
below the estimated 3.8 percent growth this year.
    "Latin America and Caribbean will experience an acceleration
in economic growth in 2013 despite persistent global
uncertainty, especially in relation to the difficulties in
Europe, the United States and China," Santiago-based ECLAC said
in a statement.
    "The region will post a growth rate around 3.8 percent next
year, chiefly boosted by a recovery of the Argentine and
Brazilian economies and a continued dynamism of domestic demand
in various countries," it said.
    Many of the region's countries have experienced a jump in
domestic demand thanks to easier access to credit, economic
growth, a larger middle class and the spread of retailing. 
    But Latin America, a major exporter of commodities ranging
from copper to soy, is not immune to global economic headwinds,
the UN warned. 
    "A potential brusque fiscal adjustment in the United States
and the debt crisis in some European Union countries are factors
of uncertainty that downwardly pressure the global economy, with
a direct impact on the Mexican economy via its international
trade, remittances and Foreign Direct Investment (FDI)," the
agency said. "Domestic demand will continue to buoy (Mexico's)
economic growth," the ECLAC added.
    ECLAC lowered its projection for 2012 growth from an October
estimate for 3.2 percent growth. 
    The region's economy grew 4.3 percent in 2011. 
    ECLAC sees Brazil, the region's No.1 economy, expanding 4.0
percent next year, unchanged from a previous view, speeding up
from a forecast 1.2 percent expansion this year.
    It cited "a recovery in industrial production, continued
domestic demand and an increase in exports due to higher
competitiveness gained by stimulus measures."
    Brazil's economy will gain steam in 2013 and inflation will
converge to the center of a government target range, the
country's central bank president Alexandre Tombini also said on
    A Brazilian central bank survey on Monday showed economists
expect the world's sixth-largest economy, one of the fastest
growing emerging countries only two years ago, to expand just
1.03 percent this year, less than the International Monetary
Fund forecasts for Japan and the United States. 
    Argentina's economy is expected to grow 3.9 percent in 2013,
up from a previous estimate of 3.5 percent growth and from its
estimated 2.2 percent expansion this year.   
    "The recovery in (Argentina's) economic growth... is thanks
to better agricultural production - chiefly in the soy and corn
harvests, the recovery of Brazil and a sustained expansive
fiscal policy," the UN agency added.
    Here is the breakdown of ECLAC's growth estimates, all
figures expressed in percentage:
                      New f'cast   Previous f'cast    New f'cast
                          2013            2013            2012
    Brazil                 +4.0           +4.0           +1.2
    Mexico                 +3.5           +4.0           +3.8
    Argentina              +3.9           +3.5           +2.2
    Colombia               +4.5           +4.5           +4.5
    Chile                  +4.8           +4.8           +5.5
    Peru                   +6.0           +5.5           +6.2
    Latam & Caribbean      +3.8           +4.0           +3.1

 (Reporting by Anthony Esposito; Writing by Alexandra Ulmer and
Anthony Esposito; Editing by James Dalgleish, Nick Zieminski and
Sofina Mirza-Reid)

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