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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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Macroeconomic prospects for Latin America

OECD Development Centre

The high economic growth rates of the 2000s experienced in Latin America fuelled by favourable external conditions are over. Instead, the region continues to deal with a deteriorating external environment that, without experiencing any major internal crises, is leading to modest growth rates. Medium-term growth projections, however, show further downward revisions. This suggests that potential output growth is less robust than expected, which could present a risk to recent socioeconomic achievements. This chapter assesses Latin America’s growth prospects in the challenging international environment and explores how vulnerable the region is to further adverse changes in external conditions. The domestic outlook focuses on the need to stabilise and increase investment rates and productivity. The external outlook focuses on the effect of China’s “new normal” and looks at how slower growth and structural change in China is altering the Latin American landscape, as well. It then discusses how these factors influence the main real and financial indicators in the region, and will shape the external environment for decades to come. The chapter ends with shortand long-term proposals for economic policy, highlighting the diverse socio-economic landscapes in Latin American countries.

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