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IMF Forecasts for 2016 Latin America burdened by fall in Brazil

The forecast for 2016 the Latin American economy will "most likely revised downwards", carried by the "intensification" of the "political crisis" in Brazil, according to Efe lead director of Western Hemisphere Department of the IMF. Alejandro Werner.

The Brazilian crisis may "postpone" the regional rebound from the estimated 0.3% contraction in 2015, Werner said in an interview with Efe at the headquarters of the International Monetary Fund (IMF) in Washington.

"Our latest projections for the region, presented at the annual meeting in Lima in October, showed negative growth in 2015 and that there would be some recovery in 2016," said the head of the financial institution.

At the meeting in Lima, which marked the return of the Assembly of the International Monetary Fund in Latin America in more than half a century, the agency estimates pointed to negative growth of 0.3% in 2015 and a slight recovery of 0.8% 2016.

This outlook was "product" Werner, "four countries in contraction or low growth," citing among Venezuela (-10%), Brazil (-3%) and Argentina and Ecuador with an expansion "around zero she said ".
"Today, in the second week of December, the information we have received from Lima has been generally negative, the political crisis in Brazil has intensified and has delayed the expected recovery," he said.

Therefore, Werner said, "most likely forecasts for 2016 in the region that will present in late January have a downward revision."

In Brazil, the "brake" on economic plan launched by the government earlier this year by "the political crisis and corruption scandals has raised uncertainty and it has generated a vicious circle to a weaker economy," he said.

"It's a very complex situation," he admitted Werner about the largest economy in the region.

Argentina, meanwhile, faces "major macroeconomic imbalances" that must be addressed by the new government of President Mauricio Macri.

"Record high inflation, has grown little, there is shortage of foreign exchange controls and has significant capital to create distortions in employment and growth," Werner said about the Argentina economy, for which the Fund expects a negative growth 0.7% in 2016.

He also stressed that the recovery of other economies had slowed, as Peru, Paraguay, Uruguay, Colombia or Chile, will be "in many cases, weaker than anticipated".

In October, the IMF projected growth of 2.8% in Colombia, 2.5% for Chile, Peru 3.3% to 2.2% for Uruguay and Paraguay 3.8% for 2016.

By far, this slowdown is caused by the sharp drop in commodity prices and the slowdown in China's economy, one of the major trading partners of the region.

The bleak landscape imminent rise in interest rates in the United States adds, the anticipation has increased pressure on Latin American currencies, in some cases at record lows against the dollar, and increased volatility in capital flows to emerging Emerging markets return to safer places.

For Werner, despite the volatility generated, the eventual rate hike in the first world economy would be "good news" because it would note the sharp rebound after the global financial crisis of 2008.

In this regard, Central American and Caribbean countries, along with Mexico, face more favorable given the good economic times US winds.

According to the latest estimates of the institution he leads Christine Lagarde, Central America will grow at an average of 4.2% and Mexico's second largest regional economy, will make 2.5% next year. EFE

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