The world economy is changing gears again. Developing economies, which were the driving force in the past five years, are slowing down. That has led the International Monetary Fund to revise significantly downward its estimate for Latin America's combined economies, expected to grow 2.7 percent this year, one of the lowest growth rates in recent years.
In its previous report, the IMF estimated for the region a growth of 3.4 percent. The new estimate is two-tenths of a percentage point higher than the growth rate of 2012, which was 2.5 percent. The reasons behind this decrease are mostly external, as pointed out by the report: slow growth in the U.S. and a slowing down of China's economy have affected the region enormously as foreign investment fell.
The institution did point out, however, that growth will increase to an estimated 3.1 percent the following year. And even this year, Latin America’s forecast is in line with the rest of the world: the global growth average is 2.9 percent. For developed countries, the growth average was forecast at 1.2 percent, whereas for the developing economies, the average was 4.5 percent.
Individual economies follow the trend. Mexico has an estimated growth of 1.2 percent in 2013, as opposed to 3.6 percent last year. It's expected to accelerate to 3 percent in 2014, thanks to the trade partnership with the U.S. and its latest slew of reforms.
Brazil will grow 2.5 percent both in 2013 and 2014. The country’s high inflation, around 6 percent as of August, is slowing things down for the region’s biggest economy, but the devaluation of its currency might help stabilize the situation, according to the IMF.
Argentina is expected to grow 3.5 percent this year, nearly double the rate of 1.9 percent in 2012 and well above the previous IMF estimate of 2.8 percent.
Patricia covers Latin America for the International Business Times.
Before joining IBT in March 2013, she worked at BBC America in New York, La República in Lima...