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Latin American Economic Outlook 2016

Towards a New Partnership with China

image of Latin American Economic Outlook 2016

The Latin American Economic Outlook 2016 is devoted to the evolving relationship between Latin America and China, as well as its prospects in the long term. China's transformation involves a gradual shift in its development strategy, including the rebalancing process from investment to consumption, the demographic transition, the structural transformation towards high value-added goods and services, and a "going-out" policy to approach other regions. This report lays the ground for discussing future trends in the relationship between China and Latin America, given these changing patterns. Based on the analysis of potential transmission channels of China’s new model to the region, which include issues on trade, finance and skills, the outlook aims to identify strategies and policy responses for Latin America to overcome development challenges. Latin America and China can complement each other further and build a mutually beneficial partnership for development.

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Editorial

OECD Development Centre

After a full decade of convergence with advanced economies and important progress in addressing inequality, Latin America’s average growth will fall below the average of OECD countries in 2015 for a second consecutive year. Medium-term prospects are not encouraging either. These developments reflect well-known domestic weaknesses, illustrated by below par productivity and investment growth paired with the external environment’s deterioration and key social challenges. Latin America remains the world’s most unequal region; poverty still affects 28% of its population and labour informality persists. The consolidation of the US economy has been positive for a few economies in Latin America but the medium-term effects are still not visible, particularly as the ensuing monetary retrenchment leads to tighter financial conditions. Economic activity is also recovering but at a slower pace than expected in Europe and Japan.

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