As the 2019, get into the second half, it starts the performance evaluation about real economic growth, and the one expected at the beginning. Most of the GDP growth forecast had to be revisited downward . IMF expected 1,4% and now it is adjusting it toward 0,6%. ECLAC was not too much different from an initial estimation of 1, 3% for 2019 to an adjusted one of 0,5%. This percentages are below the global GDP growth of 3% expected by the United Nations for 2019 and 2020, and the 3,2% expected by the IMF. This means that while the rest of the world keep the pace of steady economic growth despite trade negotiations and geopolitical risk, Latin America economies are staying behind.-
What it may appears like a transitory situation, it has become a permanent one. Some data illustrate this statement: Between 2014 and 2018 Latin America economies growth were on average 0,6%.Since 2000 up to 2016 , economic growth in Latin America economies were 2,8% ,almost half the economic growth in the same period , for 56 emerging economies excluding China .
The decade 2010-2018 does not show anything but disappointing outcomes, it was just 2,3% with low interest rate for most of that period, and steady global economic growth. Thus Latin America has a long run trend to lower economic growth, while the rest of the world, seems to keep its stand in a better shape.-
When it comes to find explanations, the list is not a short one:
a.- The most important economies of the region (Argentina , Brazil and Mexico), have not been able to take the lead to boost regional economic growth.-
b.- External demand for commodities, have been hit by lower pace for economic growth of its first global consumer (China).-
c.- Main primary export prices have fallen , reducing export incomes for those countries (the majority) whose export are heavily concentrated on commodities. In fact according an ECLAC study (2015), income elastic of exports to China and the rest of Asia is 2,3 which mean that higher incomes level in Asia, has a relevant impact on Latin America exports response. So , a drop in China economy incomes due to lower economic growth, means an important negative effect on those economies whose exports depend upon that country.-
What about options?
a.- It seems clear the Latin America has to move away from exporting just commodities. More so whether these depend of the economic growth pace of a kind of a monopsony consumer. Latin America economies, should move to become a services facilities provider such as, housekeeping, environmental services, and janitorial services spanning health care, hospitality, education, governmental, and many other facility sector, (www.ieha.org), Floor care, carpets maintenance, emergency cleaning, Window cleaning and so forth(www.latinamericansvc.com ).Insurance and micro finance sectors, also has a relevant potential to take into account.
b.- To support foreign investment in those key areas which are inputs for both strategic commercial and trade links between the Atlantic and the Pacific market, such as Central America, or those economies with high market potential, such as Brazil, Mexico , Argentina, Colombia , or those ones better endowed with services facilities to connect east and west trade flows (Chile ,Uruguay and sooner than later ,Peru) .
c.- The problem with (b) is that of all those possibilities, the real ones are just a few. However, there are some positive signal in Brazil(109 out of 190 economies with better facilities to do business).Mexico is finding its way out of the neoliberal experience, which means tough choices when it comes to deal with investment needs to overcome inequalities. This investment flows, come from private sector. Argentina is at its own cross road. So it looks likes the past has a stronger appeal to decide what it is more convenient.-
So , the problem it is not that Latin America economies lacks options, but rather which are the ones to be considered.-
