(Bloomberg) -- Latin America's two largest economies will grow less than 1% this year amid weakening confidence and policy uncertainty, according to the International Monetary Fund.
Brazil and Mexico will grow 0.8% and 0.9%, respectively, according to a July update of the IMF's World Economic Outlook. Two months ago, the IMF had forecast that Brazil would expand between 1% and 1.5%, while its outlook for Mexico's economy was 1.6% in April. Those cuts bring the IMF's growth outlook for Latin America down to 0.6%, from 1.4% previously.
“The sizable downward revision for 2019 reflects downgrades to Brazil, where sentiment has weakened considerably as uncertainty persists about the approval of pension and other structural reforms,” the IMF said, adding that in Mexico “investment remains weak and private consumption has slowed, reflecting policy uncertainty, weakening confidence, and rising borrowing costs, which could climb further following the recent sovereign rating downgrade.”
To read more: Lost Decade Specter Haunts Latin America as Big Economies Falter
Brazil and Mexico together account for more than half of Latin America's economic activity and their withering outlooks means the region's growth will be the worst in three years. Still, the IMF highlighted that some nations are faring better.
“Peru and Colombia are more resilient compared to the larger economies in the region,” Gian Maria Milesi-Ferretti, the deputy director of the IMF's research department, said at a press conference in Santiago, Chile.
The same can't be said for Venezuela, where the IMF forecasts a “devastating” economic contraction of 35% this year. That's even worse than the expectation of a 25% plunge in its April report.
To contact the reporters on this story: David Biller in Rio de Janeiro at dbiller1@bloomberg.net;Daniela Guzman in Santiago at dguzman26@bloomberg.net
To contact the editors responsible for this story: Juan Pablo Spinetto at jspinetto@bloomberg.net, ;Walter Brandimarte at wbrandimarte@bloomberg.net, Matthew Malinowski
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