Economic activity in Latin America and the Caribbean remains sluggish. The weak momentum shows negative surprises in the first fifty percent of 2019, elevated domestic policy doubt in a few large economies, heightened US-China trade tensions, and lower global development somewhat. Elevated policy uncertainty in some large economies of the region in addition has contributed to the weak growth momentum. Of this year largely reflects temporary factors Sluggish activity in the first half, including adverse weather conditions that reduced mining result in Chile and agricultural output in Paraguay. Mining activity in Brazil moderated following the Brumadinho Dam devastation, while growth in Mexico weakened due to an under execution of the budget, labor attacks, and gas shortages.
Elevated policy uncertainty in a few large economies of the spot has also contributed to the poor development momentum. In Brazil, concerns about the timing and scope of much-needed pension reforms-with a draft costs currently being discussed by Congress-has kept policy uncertainty above historical averages. Similarly, in Mexico, uncertainty remains high due to certain policy reversals, notably pertaining to energy and education reforms. There’s also continuing concerns about the financial health and prospects of Pemex. In Argentina, uncertainty has moderated, and more recently inflation has started to decline while economic activity rebounds. Weaker global growth and lingering US-China trade tensions also have hurt the Latin America region through their impact on commodity prices and exports.
Risks to the outlook remain tilted to the downside, including from a further escalation of US-China trade tensions, a …