IMF: LatAm econ to be worse than expected

Last May, the International Monetary Fund (IMF) anticipated that Latin America’s economy would recover quicker from the global crisis than other regions and even faster than advanced industrialized nations. Before that rebound, however, the IMF expects the region to face worse economic woes than were initially estimated:

Latin America’s economy will contract more than initially forecast this year, before rebounding in 2010 because of stronger demand for the region’s commodities, the International Monetary Fund said today.

Latin America’s gross domestic product will shrink 2.6 percent in 2009, down from a previous forecast for a 1.5 percent drop, according to an update of the IMF’s World Economic Outlook. The region will bounce back in 2010, expanding 2.3 percent, up from a previous forecast for growth of 1.6 percent.

The IMF study has already had a negative effect on stocks throughout the region. Brazil’s main stock index has dropped by 1.5% in trading so far today.

In a bad sign for the U.S., neighboring country and major economic partner Mexico is expected to have its GDP drop by a whopping 7.3% this year alone. Worse is that the IMF prognosticates that the U.S. economy will not have sustained growth until the second half of 2010.

In terms of the world, the IMF anticipates that global output will falter by 1.4% yet the 2010 recovery is expected to be greater than estimated three months ago.

Image- TIME (“Trucks crossing into the U.S. from Mexico pour through a U.S. Customs inspection station at the Otay Mesa Border Crossing in San Diego.”)
Online Sources- Bloomberg, Reuters, AP, CBC