MEXICO CITY--The International Monetary Fund has cut its economic growth projection for Latin America this year to 3.6% from 3.9%, due to a more muted outlook for Brazil, according to its World Economic Outlook released Wednesday.
The IMF predicts the region's combined gross domestic product will expand at a rate similar to that of the world, which it sees expanding by 3.5%.
Latin America's forecast is also better than the IMF's projection for a 1.4% expansion in advanced economies.
As recently as October, the IMF's World Economic Outlook forecast that Latin America would expand by 3.9% in 2013, anchored by a 3.9% expansion in Brazil, Latin America's largest economy, and 3.5% growth in Mexico.
In 2012 Latin American economies expanded by 3%. Now, the IMF projects Brazil will expand by 3.5% this year, at the same pace as the Mexican economy, the region's second largest.
Supportive policies have "underpinned" activity in many developing economies, the IMF said, but weakness in advanced economies will weigh on external demand, as well as on the terms of trade of commodity exporters, given the assumption of lower commodity prices in 2013.
The IMF singled out Brazil as having "diminished" space for further policy easing, while supply bottlenecks and policy uncertainty have hampered growth there.
Projections for growth in Latin America lag those of emerging markets as a whole, with the IMF predicting a 5.5% economic expansion this year for developing economies.
The projected growth in emerging markets is supported largely by the expectation that China's GDP will grow 8.2% this year and that developing Asia as a whole will grow 7.1%.
The IMF's latest projections imply that global growth will strengthen gradually through 2013 to average 3.5% on an annual basis, a moderate uptick from 3.2% percent in 2012.
External risks going forward include the potential for renewed setbacks in the euro zone and fiscal issues in the U.S. "If crisis risks do not materialize and financial conditions continue to improve, global growth could be stronger than projected," the IMF said.
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The IMF predicts the region's combined gross domestic product will expand at a rate similar to that of the world, which it sees expanding by 3.5%.
Latin America's forecast is also better than the IMF's projection for a 1.4% expansion in advanced economies.
As recently as October, the IMF's World Economic Outlook forecast that Latin America would expand by 3.9% in 2013, anchored by a 3.9% expansion in Brazil, Latin America's largest economy, and 3.5% growth in Mexico.
In 2012 Latin American economies expanded by 3%. Now, the IMF projects Brazil will expand by 3.5% this year, at the same pace as the Mexican economy, the region's second largest.
Supportive policies have "underpinned" activity in many developing economies, the IMF said, but weakness in advanced economies will weigh on external demand, as well as on the terms of trade of commodity exporters, given the assumption of lower commodity prices in 2013.
The IMF singled out Brazil as having "diminished" space for further policy easing, while supply bottlenecks and policy uncertainty have hampered growth there.
Projections for growth in Latin America lag those of emerging markets as a whole, with the IMF predicting a 5.5% economic expansion this year for developing economies.
The projected growth in emerging markets is supported largely by the expectation that China's GDP will grow 8.2% this year and that developing Asia as a whole will grow 7.1%.
The IMF's latest projections imply that global growth will strengthen gradually through 2013 to average 3.5% on an annual basis, a moderate uptick from 3.2% percent in 2012.
External risks going forward include the potential for renewed setbacks in the euro zone and fiscal issues in the U.S. "If crisis risks do not materialize and financial conditions continue to improve, global growth could be stronger than projected," the IMF said.
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