The United Nations’ Economic Commission for Latin America and the Caribbean estimates that the region’s economy will expand 2.2% this year, a sharp reduction from a previous forecast of 2.7%.  Growth in Panama is seen leading this year at 6.7%, followed by Bolivia at 5.5%, then Colombia, the Dominican Republic, Ecuador and Nicaragua at 5.0%.

The projection is based on weaker external demand, less dynamic domestic demand, lagging investments, and limited room for putting in place policies to boost growth, according to the U.N. agency, known as Eclac. Growth has trended lower in the region over the past few years, with an expansion of 2.5% last year, 2.9% in 2012 and 4.3% in 2011, it said.

“Without a doubt, it is important in all cases to increase investment and productivity to guarantee structural change with equality in the medium term,” Eclac Executive Secretary Alicia Bárcena said.

The Eclac report said that the main risk to growth this year comes from China, as commodity-exporting nations could be harmed if growth in that Asian nation doesn’t stay above 7.0%.

Argentina’s economy will barely grow this year, while Venezuela’s economy could contract by 0.5%, the agency said.