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UN commission forecasts modest economic growth in Latin America, Caribbean

UN commission forecasts modest economic growth in Latin America, Caribbean

Latin American and Caribbean countries will enjoy better economic, employment and financial conditions this year, though the recovery will be modest - according to a report released by the United Nations economic commission for the region.

The report of the UN Economic Commission for Latin America and the Caribbean (ECLAC), presented yesterday, says the region's economy will have a 1.5 per cent growth in 2003, a slight recovery from a 0.6 per cent drop in 2002.

The document, a preliminary version of ECLAC's annual Economic Survey of Latin America and the Caribbean, also reveals that per capita gross domestic product (GDP) will remain flat this year, at 2 per cent less than in 1997, completing the region's sixth lost year.

ECLAC forecasts a flattening of growth due to the lack of both a powerful drive from the world economy and a strong domestic reactivation. Despite trends in the world economy, the current value of export goods should rise 4.4 per cent, after stagnating last year. Countries posting the strongest export performance are those with competitive exchange rates or those concentrating investments in non-renewable natural resources.

The study points to three trends as being the most significant in terms of economic policy for this year. First, fiscal reforms became increasingly structural, and a move away from the short-term is clearly underway.

Second, monetary policy has gained greater freedom to manoeuvre. To defend against foreign exchange pressures last year many economies shifted towards a more restrictive monetary policy stance, particularly in South America. However more countries are now implementing more expansionary monetary policies.

Finally, foreign exchange policy has faced a calmer year. So far, 12 countries have seen real appreciation against the United States dollar and most are enjoying more competitive exchange rates than in 2001.