The Economic Commission for Latin America and the Caribbean (ECLAC) has reduced the growth forecast of Brazil and the region this year. The estimate for the increase in Brazil’s gross domestic product (GDP), the total amount of goods and services produced by a country in a year, fell from 2.3 percent to 1.4 percent. For Latin America and the Caribbean, the prediction went from 2.7 percent to 2.2 percent.

According to ECLAC’s Brazil Director Carlos Mussi, the country’s projection was based on information collected up to the end of June, and did not include data that were “significantly worse than the industrial production” from last month. Mussi argued, however, that services and trade are likely to prevent a further decline in the GDP. “There’s some expectation that maybe the sectors of services and commerce will not show a performance as poor as its industrial counterpart,” Mussi said. ECLAC’s Executive Secretary Alicia Bárcena believes that Brazil is a powerful country and should present better results in 2015.

According to ECLAC, the downgrade proved necessary because of the region’s “weakness in external demand, less dynamic domestic demand, insufficient investment, and limited room for implementing policies to spur an upturn.”

On their website, the commission reports that “The [Economic Survey of Latin America and the Caribbean 2014] indicates that the economic slowdown observed in the last quarter of 2013 persisted during the first months of 2014, meaning that the region will grow less than it did last year (2.5%). Nevertheless, the report signals that a gradual improvement in some of the world's major economies should enable the trend to change towards the end of 2014.”

In the view of ECLAC, “The resumption of economic growth in the United States will benefit Mexico and Central American countries, while the recovery of the United Kingdom and several economies in the euro zone will have a positive impact, especially in the Caribbean, due to the arrival of more tourists.”

“The main risk is the lower growth forecast for China in 2014, the report emphasizes. The regional economies that are more specialized in exporting commodities to that country could be affected if the Asian giant cannot maintain its growth above 7 percent,” ECLAC added.