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UN report sees dim prospects for Latin American economy

UN report sees dim prospects for Latin American economy

Regional economic output in Latin America and the Caribbean grew barely 0.5 per cent in 2001 and the prospects for growth next year are not very encouraging, according a new report from the UN Economic Commission for Latin America and the Caribbean (ECLAC).

The annual Preliminary Overview of the Economies of Latin America and the Caribbean in 2001, which was made available today on the ECLAC website, notes that the economic downturn in the region took place against the background of the worst global economic crisis in 20 years, which has its "epicentre" in the US economy. For 2002, ECLAC forecasts regional growth of a very "modest" 1.1 per cent.

Commenting on the report's findings, the Commission's head, Jose Antonio Ocampo, stressed that in the reviewed period Latin America experienced "its third sharp slowdown in productive activity in less than a decade." The sharp drop in growth has meant no improvement in employment rates, with some 91.6 per cent of the regional workforce unemployed. For those with jobs, wages have stagnated or fallen in real terms.

Meanwhile, the capacity of governments to cushion the impacts of the crisis remained limited, Mr. Ocampo stressed. "The current crisis has made the enormous asymmetry in the world's economy patently clear," he said, adding that developing countries not only experience global boom-and-bust economic cycles more severely, but also lack the capacity to employ anti-cyclic policies, and are sometimes forced to adopt macroeconomic policies that accentuate the cycles.

According to Mr. Ocampo, the answer to these problems lies in reforms to the international economic system that allow policies to be enacted which will prevent booms translating into unsustainable expansion, and also provide more room for proper policy responses when a crisis hits.