SANTIAGO (Alliance News) – Latin America’s economy will shrink in 2016 by 0.8%, according to a projection by the UN Economic Commission for Latin America and the Caribbean (ECLAC).

The group’s annual Economic Survey of Latin America and the Caribbean, released Tuesday in the Chilean capital Santiago, blamed the recession on a slow global economy, falling prices for the region’s commodities and uncertainty and volatility in global markets.

Ongoing recessions in Brazil and Venezuela, among others, helped put the brakes on regional growth.

Brazil’s economy is expected to shrink 3.5% this year, while Venezuela should prepare for an 8% contraction, according to the report. Argentina should also expect a recession of 1.5%, ECLAC said.

Slowing demand both in export and domestic markets have also clouded the region’s economic outlook, according to the report.

Falling oil prices hurt Venezuela and Brazil, both major exporters – but helped Central America, a net importer.

While South America’s economy overall was expected to contract by 2.1%, the outlok was brighter in smaller Central America, where the regional economy was expected to grow 3.8%.

ECLAC chief Alicia Barcenas said the region’s economy needed a makeover to productivity, investment policies and relations between the public and private sectors.

“The region needs progressive structural change with a big environmental push that promotes development based on equality and sustainability,” she said.

This is the second year in a row of negative growth in Latin America. In 2015, the economy shrank by 0.5%.

Copyright dpa

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