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Economic activity in Latin America and the Caribbean (LAC) has been slowing steadily since 2010. The region registered a 0.3% contraction in real GDP in 2015. This dip reflects underlying weaknesses in both aggregate demand and supply in the context of decreasing commodity prices; a slower Chinese economy; and shrinking investments. Despite lower commodity prices, inflation rose to 11%, up from 8% in 2014. The 2015 current account balance as a percentage of GDP reached–3.3% from- 3% in 2014. The region’s average growth was weighed down by the slowdown in economies such as Argentina and Brazil but balanced by growth in other countries of the region. Bright spots include Panama, the Dominican Republic, Nicaragua, Bolivia, Paraguay and Peru, which shared an estimated average growth of 4%–6% for 2015. In comparison, Mexico, Chile, Costa Rica and Uruguay are estimated to stay within the 3%–4% range.
The LAC region showed impressive gains in achieving the MDGs. The region reached the target of halving the extreme poverty rate, with the proportion of people living on less than US$1.25 a day, falling from 13% in 1990 to 4% in 2015. It recorded the highest representation of women in parliaments (27%) among all developing regions, and registered a similar participation of women in paid, non-agricultural employment in 2015. The region also reached the hunger reduction target and made notable steps in expanding access to primary education, with the adjusted net enrolment rate growing from 87% in 1990 to 94% in 2015. The entire LAC region also achieved gender parity in primary education and reached the target of a two-thirds reduction in the under-five mortality rate, while the Caribbean sub-region registered the sharpest decline in the number of people newly infected with HIV. However, disparities remain large among the Latin American and the Caribbean sub-regions. The extreme poverty rate in the Caribbean decreased from 33% to - 22% between 1990 and 2015, while in Latin America it dropped from 12% to - 4%.
OFID’s footprint in the LAC region extends to 29 countries, 14 of whom received support in 2015, sharing a sizable US$229.1m in new financing for development, or some 19% of total global commitments for the year. All financial instruments were utilized in delivering these much-needed resources, with the lion’s share (US$192.5m) approved in public sector lending. Of that sum, over 70% (US$137m) will support the construction and/or upgrading of road infrastructure in Belize, Bolivia and Paraguay, with the goal of easing the movement of people and goods and generally enhancing socioeconomic integration.
Trade financing activities comprised term loans to banks in Guatemala (US$5m) and Honduras (US$15m) for on-lending to SMEs and corporates. Under the private sector, a US$15m loan to the Latin American Agribusiness Development Corporation will enable the extension of medium-term loans to private small- and medium-size agribusinesses in Central and South America and the Caribbean.
In the area of grant financing, the allocation for 2015 was US$1.6m. Relating mainly to capacity building in the agriculture, education, energy, health, and water and sanitation sectors, these funds will benefit a total 12 countries .