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IMF Cuts 2019 Latin America Growth Estimate by More Than Half

FILE - A food vendor tells shoppers he can't accept their debit cards, the most common form of payment due to inflation, during an electricity blackout in Caracas, Venezuela, March 10, 2019.

The IMF on Tuesday slashed its economic growth expectation for Latin America in 2019 by more than half compared with estimates from just three months ago, citing its downgrades to growth in both Brazil and Mexico, the region's largest economies.

Latin America's economic output is now expected to grow 0.6% this year, down from an expected 1.4% growth in the International Monetary Fund's outlook from April.

Globally, the IMF expects GDP to grow 3.2% this year, or about 0.1% below their previous estimate.

Brazil's 2019 growth estimate was cut to 0.8% from 2.1% in April, while Mexico's fell to 0.9% from 1.6%.

The sharp cut to Brazil, by far Latin America's largest economy, stems mainly from uncertainty over the future of legislation including a key pension overhaul. An initial vote cleared the lower house of Congress earlier this month, but full passage is still pending.

The initial vote, however, helped snap a run of 20 consecutive weeks of growth forecast downgrades by Brazilian economists in a central bank survey.

Mexico, on the other hand, faces an increasingly tough environment as investors continue to lose confidence in the policies of President Andres Manuel Lopez Obrador and as industrial output slides.

The IMF report also mentioned expectations for a slightly deeper-than-expected recession in Argentina in 2019 and a slower recovery in 2020.

Venezuela's expected 35% contraction this year would bring the economic collapse of the oil-producing country to about 63% from 2015 levels, the data show.

Latin America's growth estimate for 2020 was cut to 2.3% from 2.4%, the IMF said.