SANTIAGO (Reuters) - The United Nations predicted on Wednesday that the economy of Latin America and the Caribbean will contract 0.9 percent in 2016, slightly lower than the 0.8 percent contraction estimated by the agency in July.

Looking ahead, growth in the region in 2017 is expected to be 1.5 percent, according to a statement by the United Nations Latin American arm (ECLAC), as prices for raw materials pick up from current multi-years lows.

"The 2017 projections take note of global surroundings that are more auspicious than those of 2015 and 2016. Prices for raw materials look better in 2017," ECLAC said.

Going country by country, growth this year is expected to contract 1.8 percent in Argentina, shrink 3.4 percent in Brazil and contract 8.0 percent in Venezuela; economies are expected to grow 2.1 percent in Mexico and 3.9 percent in Peru, according to the body.

ECLAC predicted Argentina would grow 2.5 percent in 2017, a significant uptick, though that is less than the 3.5 percent growth President Mauricio Macri predicted in an interview with Reuters in August.

The agency predicted dramatic regional variations in growth in Latin America. Commodities-dependent South America will shrink 2.2 percent in 2016, while Central America will grow 3.7 percent.

In July, ECLAC head Alicia Barcena predicted Argentina would contract 1.5 percent in 2016, Brazil would contract 3.5 percent, and Mexico would grow 2.3 percent.

(Reporting by Gram Slattery; Editing by Bernadette Baum)