Latin America and the Caribbean in the World Economy 2014

Regional integration and value chains in a challenging external environment

image of Latin America and the Caribbean in the World Economy 2014
The 2014 edition of this publication reviews the main features of a persistently weak global economy and world trade and then turns to global and regional trade trends and prospects. The publication considers the main changes in the organization of production and global trade associated with international production networks, which are at the heart of current mega-regional negotiations. It looks at how the the region's countries are positioned in international production networks and value chains. It analyzes the main factors underpinning participation in production networks and value chains, as well as the implications they have for integration.

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Adverse impacts of the international environment on Latin American trade

Global economic growth forecasts have been progressively scaled back since the beginning of 2014. As of September, the predominant mood is that global economic activity in 2014 will improve only slightly, if at all, in comparison with 2013. Of the main developed economies, only the United Kingdom is set to post significant growth (in excess of 3%), while the United States and Japan are likely to grow by about 2% and 1%, respectively. Any growth in the eurozone will be less than 1%. The available data for the second half of the year suggest that the eurozone is perilously close to another slump, with the German economy deteriorating sharply, France stagnating and Italy facing a new recession. Developing economies are also likely to see some deceleration. With the exception of India, all of the BRICS economies (Brazil, Russian Federation, India, China and South Africa) are likely to post slower growth, as are the Association of Southeast Asian Nations (ASEAN), the Commonwealth of Independent States (CIS), and Latin America and the Caribbean. Besides the structural challenges facing developed countries, which act as a drag on their growth, a number of one-off factors are darkening the global outlook. These include a drop in GDP in the United States in the first quarter and in Japan in the second quarter, financial market turbulence and armed conflicts in the Middle East and Ukraine. The economic sanctions imposed on the Russian Federation by the United States, the European Union and Switzerland seem to be weighing on growth expectations in Germany and, by extension, the eurozone as a whole.

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