The International Monetary Fund reduced its 2019 economic growth forecast for Latin America and the Caribbean to 0.2% from 0.6% previously, driven by significantly slower activity in the region's largest economies.
In its latest World Economic Outlook report, the IMF said the lower growth projection for the region reflects downgrades to Brazil, where mining activity has been impacted by supply interruptions. The agency expects the country's economy to grow by 0.9% this year, up 0.1 percentage point from its July forecast but lower by 1.2 percentage points from the April forecast.
Meanwhile, the IMF cut its 2019 growth projection for Mexico by 0.5 percentage point to 0.4%, as policy uncertainty, dampened confidence and higher borrowing costs continue to weigh on investment and private consumption.
Growth in Brazil and Mexico is expected to recover to 2.0% and 1.3%, respectively, in 2020.
The IMF also reduced its GDP forecast for Chile to 2.5% in 2019, following lower-than-expected growth in the first half of the year.
Argentina's economy is expected to shrink by 3.1% in 2019 and 1.3% in 2020 given lower confidence and more difficult external financing conditions.
Further, the IMF believed that the Venezuelan humanitarian crisis and economic implosion will cause the country's economy to contract by 35% in 2019.
The IMF projects growth in the region to rise to 1.8% in 2020, 0.6 percentage point lower than its April forecast. The growth outlook for the region also remains below 3% over the medium term, driven by structural rigidities, subdued terms of trade and fiscal imbalances, the IMF said.
The agency expects the global economy to expand 3.0% in 2019, a 0.3-percentage-point decrease from a previous forecast in April. The latest forecast, which is the lowest since the global financial crisis, is anchored on rising trade volatility, political uncertainty and a slowdown in the momentum of manufacturing activity.