U.N. lowers 2013 Latam growth view, sees pick-up versus 2012

SANTIAGO (Reuters) - The economy of Latin America and the Caribbean will likely grow by 3.8 percent in 2013, less than previously forecast, as slower growth in Mexico weighs against a recovery in Brazil, Argentina and the region's brisk domestic demand, the United Nations said on Tuesday.

Next year's growth forecast was also scaled back due to uncertainty surrounding the U.S. "fiscal cliff" - a combination of steep tax hikes and deep spending cuts kicks set to start kicking in next month unless Congress steps in - and the euro zone's ongoing debt crisis.

Either way, the export-dependent region's growth is seen picking up pace from a downwardly-revised 3.1 percent expansion this year, largely defying fallout from softer demand from key trade partner China and lingering euro zone debt woes.

If next year's forecast holds, it will be the first time the region's annual growth rate has quickened since 2010.

The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) had forecast in October the region would grow 4.0 percent in 2013.

Regional growth projections for next year were cut "basically because of Mexico, but also because there are a lot of uncertainties. And our region, to some degree, continues to depend on external demand," the head of ECLAC, Alicia Barcena, told Reuters on the sidelines of a press conference to present the new forecasts.

"As long as the fiscal cliff isn't resolved and the euro zone's problems aren't fixed, they are going to continue to create uncertainty," Barcena added.

Next year's fresh regional growth outlook was dragged down by a downwardly-revised projection for Mexico, the region's No.2 economy. Global woes and possible fallout from the fiscal cliff are seen curbing Mexico's economic growth to 3.5 percent next year, down from a previous forecast of 4 percent growth and below the estimated 3.8 percent growth this year.

"Latin America and Caribbean will experience an acceleration in economic growth in 2013 despite persistent global uncertainty, especially in relation to the difficulties in Europe, the United States and China," Santiago-based ECLAC said in a statement.

"The region will post a growth rate around 3.8 percent next year, chiefly boosted by a recovery of the Argentine and Brazilian economies and a continued dynamism of domestic demand in various countries," it said.

Many of the region's countries have experienced a jump in domestic demand thanks to easier access to credit, economic growth, a larger middle class and the spread of retailing.

But Latin America, a major exporter of commodities ranging from copper to soy, is not immune to global economic headwinds, the UN warned.

"A potential brusque fiscal adjustment in the United States and the debt crisis in some European Union countries are factors of uncertainty that downwardly pressure the global economy, with a direct impact on the Mexican economy via its international trade, remittances and Foreign Direct Investment (FDI)," the agency said. "Domestic demand will continue to buoy (Mexico's) economic growth," the ECLAC added.

ECLAC lowered its projection for 2012 growth from an October estimate for 3.2 percent growth.

The region's economy grew 4.3 percent in 2011.

BRAZIL, ARGENTINA TO BOOST REGION

ECLAC sees Brazil, the region's No.1 economy, expanding 4.0 percent next year, unchanged from a previous view, speeding up from a forecast 1.2 percent expansion this year.

It cited "a recovery in industrial production, continued domestic demand and an increase in exports due to higher competitiveness gained by stimulus measures."

Brazil's economy will gain steam in 2013 and inflation will converge to the center of a government target range, the country's central bank president Alexandre Tombini also said on Tuesday.

A Brazilian central bank survey on Monday showed economists expect the world's sixth-largest economy, one of the fastest growing emerging countries only two years ago, to expand just 1.03 percent this year, less than the International Monetary Fund forecasts for Japan and the United States.

Argentina's economy is expected to grow 3.9 percent in 2013, up from a previous estimate of 3.5 percent growth and from its estimated 2.2 percent expansion this year.

"The recovery in (Argentina's) economic growth... is thanks to better agricultural production - chiefly in the soy and corn harvests, the recovery of Brazil and a sustained expansive fiscal policy," the UN agency added.

(Reporting by Anthony Esposito; Writing by Alexandra Ulmer and Anthony Esposito; Editing by James Dalgleish, Nick Zieminski and Sofina Mirza-Reid)