NASSAU (EFE) The Inter-American Development Bank on Sunday warned that Latin America will grow at an average annual rate of 1.7 percent through 2020, less than half the 4 percent the region registered during 2003-2013, and thus it is urgent to invest in infrastructure and adopt comprehensive fiscal reforms.

For 2016, the IDB forecasts a 0.3 percent economic contraction due to the drop in prices for raw materials, the slowing down of China’s economy and aging demographics, according to the macroeconomic report presented by the bank during its annual meeting held last week in The Bahamas.

A huge burden on the region’s overall economic performance is Brazil, whose sizable economy is predicted to contract by 3.8 percent this year.

According to IDB calculations, each 1 percent reduction in China’s growth rate impacts Latin America and the Caribbean by reducing the region’s growth by 0.6 percent.

As a result, fiscal reforms are inevitable during this period of a noteworthy reduction in earnings.

“Many countries see themselves in the difficult situation of having to act immediately or expose themselves to even more complicated adjustments in the future,” said IDB vice president Santiago Levy.

Levy added, however, that “the good news is that there is much room to improve the efficiency of spending and to realize a rebalancing of fiscal policies, which would permit an improvement in growth and preserving the significant social benefits achieved during the … past decade.”

The IDB’s 57th annual assembly concluded on Sunday.

During this year’s meeting, discussion and debate has focused on climate change, energy challenges and the problems that could arise in the finances of some of the region’s countries from the massive leak of documents known as the “Panama Papers” regarding the use of certain zones as tax havens.