A new special report from the UN’s Economic Commission for Latin America and the Caribbean (ECLAC) has highlighted strong growth projections for a number of countries in the region. That includes double-digit growth in Guyana and Panama, with the ECLAC report also pointing to solid showings in Chile, the Dominican Republic, and Peru, among others.
According to the ECLAC report (published in Spanish), which focuses on how countries from the region stand to fare in terms of recovering from the turmoil of the coronavirus pandemic, only two countries from the region — Suriname and Venezuela — are expected to see negative growth in 2021, while the rest of the 33 countries surveyed are expected to see positive economic results.
That includes 24 countries where growth of at least 3% is expected to be achieved, among which 11 are projected to hit at least 5% growth. Some of the standout performers include Guayana (16%), Panama (12%), Peru (9.5%), Chile (8%), and the Dominican Republic (7.1%)
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The numbers highlighted in the ECLAC report will be of particular interest to foreign investors operating in or thinking of entering those markets, and below some insight into each of those five economies is provided.
If you are interested in doing business in one of these markets, or any other in Latin America and the Caribbean, reach out to us to discuss how we can assist you.
ECLAC report: five economies that will perform well in 2021
According to a report released by the IMF in April, Guyana will be one of the world’s fastest-growing economies in 2021, thanks in no small part to its massive oil and gas industry, which is a focal point for investment entering the Caribbean nation.
That report highlighted a trend seen in the new ECLAC report, namely that while global GDP contracted during 2020, in Guyana it saw a massive increase of more than 43%, and is projected to potentially hit even greater heights in 2022.
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That means that, while Guyana’s 16% projected growth for 2021 is the highest in the region, that figure actually represents a lull for what appears to be a period of stunning GDP growth for Guyana.
Guyana’s economy has been bolstered in recent years by a number of oil reserve discoveries, including one recently announced by ExxonMobile — one of several major oil companies that have entered or increased their activities in the country in recent years.
Unlike in the case of Guyana, for the second-strongest projected performer, Panama, 2020 saw a steep economic contraction, with GDP growth of -17.9% registered. As such, Panama’s strong expected showing of 12% growth for this year represents the beginning of the country’s bounce back, which is anticipated to continue into 2022 with a further 8.2% growth.
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Having previously been predicted to see a growth of between 4% and 6% by the likes of the IMF, World Bank, and ECLAC, the new ECLAC report strikes an altogether more positive tone regarding the Panamanian economy, which will be news welcomed by international investors engaged in the country.
Among the sectors expected to drive growth are the construction sector, with the government recently announcing a $12 billion plan to encourage private investment.
With projected GDP growth of 9.5% in 2021 and 4.4% in 2022, Peru has one of the strongest projections in the region, having witnessed GDP contraction of -11.1% in 2020. This economic rebound that Peru is expected to see has already begun to be seen in the likes of export figures, with agricultural exports leaping in the first months of 2021.
The strong growth projected in the ECLAC report mirrors similarly positive projections from the likes of the World Bank and IMF, which have predicted Peru’s growth in 2021 to hit 10.3% and 8.5% respectively.
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These predictions are very positive for foreign investors engaged in the Peruvian economy, given concerns raised about how leftist President-elect Pedro Castillo could affect the economy.
While the battle to confirm his victory in the runoff election held in June is still ongoing, Castillo’s own statements committing to preserving a market economy and not implementing radical changes to the country’s economic organization offer reassurance to investors.
The ECLAC report’s prediction of 8% growth for Chile highlights another significantly brighter projection seen before, with the Economic Commission for Latin America and the Caribbean (ECLAC) previously forecasting economic growth of 5.2% for the country, while the World Bank, IMF, and OECD have predicted figures of between 6.1% and 6.7%.
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Like in Panama, the 8% growth projection points to a bounce bank from contraction seen during 2020, however in the case of Chile it will actually exceed the contraction seen in 2020, when GDP negative growth of -6.8% was registered.
Some of Chile’s expected success can be attributed to its strong showing in rolling out COVID-19 vaccines, with 55.9% of the population — the highest rate in the region — vaccinated at the time of the report being published.
Dominican Republic (7.1%)
The ECLAC report projects growth of 7.1% in 2021 and 5.5% in 2022 for the Dominican Republic, representing a sustained bounce back from the -6.7% contraction seen in 2020, with the recovery of the tourism sector of particular importance to the economy.
In June, tourism numbers reached 80% of what they were in the same month in 2019, after the country’s massive tourism sector was largely shut down in 2020. In a sign of the importance of the sector, the recent reopening of Amber Cove Port, a major disembarkation point for cruise ships, was greeted with significant fanfare and attended by numerous local officials and private sector representatives.
In another positive sign for the Dominican economy, the value of gold exports was recently reported to have leaped 80% — highlighting a bright future for the country’s most lucrative export.
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