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Preliminary overview of the economies of Latin America and the Caribbean 2014

image of Preliminary overview of the economies of Latin America and the Caribbean 2014
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 tradeable 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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Macroeconomic policies

According to projections, Latin America’s fiscal balance deteriorated slightly, on average, in 2014. The subregion’s primary deficit (before public debt interest payments) is expected to stand at 0.8% of GDP, and the overall central government deficit will widen from 2.4% of GDP in 2013 to 2.7% in 2014 (see figure VI.1), with a drop in total revenues and a slight upturn in public spending. The subregion as a whole has posted a fiscal deficit since 2009, but this has not pushed up public debt, which has held steady at about 32% of GDP, with an external component of less than 15 percentage points of GDP.

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