The Eco­nom­ic Com­mis­sion for Latin Amer­i­can and Caribbean (Eclac) says T&T will suf­fer a -2.5 per cent eco­nom­ic con­trac­tion this year.

In its lat­est Eco­nom­ic Sur­vey of Latin Amer­i­ca and the Caribbean 2016 re­leased in San­ti­a­go, Chile, yes­ter­day, the UN agency list­ed this coun­try among six the re­gion ex­pect­ed to suf­fer de­clines this year. The oth­ers and Venezuela, Suri­name, Brazil, Ecuador and Ar­genti­na

The Caribbean will suf­fer a 0.3 per cent con­trac­tion in its gross do­mes­tic prod­uct (GDP) and there will be a 0.8 per cent con­trac­tion in growth rate for Latin Amer­i­ca and the Caribbean over­all–a steep­er de­cline than the 0.5 per cent record­ed last year.

Eclac said the da­ta un­der­scores the ur­gent need to mo­bi­lize pub­lic and pri­vate in­vest­ment to pro­mote the re­gion's eco­nom­ic re­cov­ery and meet the chal­lenges im­posed by the 2030 Agen­da for Sus­tain­able De­vel­op­ment.

"The ca­pac­i­ty of coun­tries to ac­cel­er­ate eco­nom­ic growth de­pends on the spaces for adopt­ing poli­cies that sup­port in­vest­ment. These poli­cies should be ac­com­pa­nied by ef­forts to change the con­ver­sa­tion be­tween the pub­lic sec­tor and pri­vate com­pa­nies. In­creas­ing pro­duc­tiv­i­ty is al­so a key chal­lenge for mov­ing for­ward along a path of dy­nam­ic and sta­ble growth," said Ali­cia B�rce­na, Eclac Ex­ec­u­tive Sec­re­tary dur­ing a press con­fer­ence for the launch of the re­port.

The sur­vey in­di­cates that in the ex­ter­nal are­na, the glob­al econ­o­my will main­tain low lev­els of growth, which will be ac­com­pa­nied by a slow ex­pan­sion in trade, which has not man­aged to re­cov­er the lev­els seen be­fore the in­ter­na­tion­al fi­nan­cial cri­sis. On top of this, the re­port points to de­te­ri­o­rat­ed prices for the re­gion's com­modi­ties ex­ports and greater in­ter­na­tion­al fi­nan­cial un­cer­tain­ty and volatil­i­ty, which have in­creased since the Unit­ed King­dom vot­ed to leave the Eu­ro­pean Union (Brex­it). This de­ci­sion has al­so pro­duced greater risks to the world's fu­ture growth.

In the re­gion­al sphere, the re­port fore­casts a -2.1 per cent con­trac­tion for South Amer­i­ca, main­ly due to a de­te­ri­o­ra­tion in its terms of trade, weak­er ex­ter­nal de­mand and a sig­nif­i­cant de­cel­er­a­tion in do­mes­tic de­mand, which re­flects a size­able fall in do­mes­tic in­vest­ment.

Cen­tral Amer­i­ca will grow 3.8 per cent thanks to the boost com­ing from its im­proved terms of trade (re­sult­ing from low­er hy­dro­car­bons prices), the re­cov­ery of its ex­ter­nal and do­mes­tic de­mand, and in­creased in­come from re­mit­tances.

On the oth­er hand, re­gion­al growth will be led by the Do­mini­can Re­pub­lic (6.0 per cent), Pana­ma (5.9 per cent), Nicaragua and Bo­livia (4.5 per cent), and Cos­ta Ri­ca (4.3 per cent).

"Faced with an eco­nom­ic con­trac­tion, the re­gion needs pro­gres­sive struc­tur­al change with a big en­vi­ron­men­tal push that pro­motes de­vel­op­ment based on equal­i­ty and sus­tain­abil­i­ty, as we have pro­posed in our in­sti­tu­tion­al doc­u­ment Hori­zons 2030: Equal­i­ty at the Cen­tre of Sus­tain­able De­vel­op­ment, which we pre­sent­ed in Mex­i­co last May," B�rce­na said.

Ac­cord­ing to the Eclac re­port, eco­nom­ic de­cel­er­a­tion will have an im­pact on the ur­ban un­em­ploy­ment rate, which in 2015 was 7.4 per cent and which is ex­pect­ed to in­crease to 8.1 per cent this year. In­fla­tion, mean­while, should be­have sim­i­lar­ly to that of last year, with greater pres­sures on south­ern economies.

The agency said re­sum­ing the path of growth and mo­bi­liz­ing fi­nan­cial flows for de­vel­op­ment fi­nanc­ing re­quires that coun­tries must change their fis­cal struc­tures to im­prove tax col­lec­tion and pro­gres­siv­i­ty, strength­en in­come tax­es (both for in­di­vid­u­als and com­pa­nies), and fight tax eva­sion and avoid­ance, which reached the equiv­a­lent of 6.7 points of the re­gion­al GDP in 2015 at an es­ti­mat­ed US$340 bil­lion.

Ad­di­tion­al­ly, it is nec­es­sary to pro­mote re­newed pub­lic-pri­vate coali­tions and poli­cies that cre­ate ap­pro­pri­ate in­cen­tives to chan­nel fi­nanc­ing to­wards de­vel­op­ment goals. Al­so, fi­nan­cial in­clu­sion should be strength­ened as a pol­i­cy of pro­duc­tive in­ser­tion through the cre­ation of mar­kets and new in­no­v­a­tive in­stru­ments.