Preliminary Overview of the Economies of Latin America and the Caribbean 2013

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This publication highlights a regional slowdown in GDP growth. It argues that the currency depreciation seen in several countries in the region could, if sustained, increase incentives for investment in tradable sectors other than the region’s traditional exports (commodities), while redirecting expenditure to ease pressure on the current account. Growth-supporting industrial, trade, environmental, social and labour policies that take into account the needs of small and medium-sized enterprises, could help lessen the region’s structural heterogeneity. Growth combined with greater equality would thus gain economic and social sustainability, with greater reliance from investment and exports than before. It is argued that this combination would be aided by social covenants for investment.

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The external sector

Rising imports and stagnant exports in 2013, reflected in a narrower trade surplus, were the main but not the only explanation for the wider current account deficit for the region as a whole with respect to 2012 (see figure IV.1). As a proportion of GDP, the deficit widened from 1.8% in 2012 to 2.5% in 2013. The hydrocarbon-exporting economies posted a current account deficit (0.7%) for the first time in several years. The group formed by Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama), Haiti and the Dominican Republic recorded the largest average deficit in the region (6.4%), though there were significant differences between the countries, with the deficit ranging from 16.2% in Panama to 3.0% in Haiti. That group was followed by the exporters of minerals and metals —Chile and Peru— with a deficit of 3.9% (Chile posted a deficit of 2.7% and Peru 5.4%).

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