Exports from Latin America and the Caribbean are on track to grow at an estimated 23 per cent this year, despite the global financial crisis, according to a report released today by the United Nations office for the region.
Higher commodity prices during the first half of the year, particularly in metal and fuel, led to a 25.5 per cent increase in the value of exports, compared to a 10 per cent increase for the same period in 2007.
The “Latin America and the Caribbean in the World Economy” report, released in Mexico City, also noted that the value of imports to the region will rise by an estimated 22 per cent, leading to an expected trade surplus of $51 billion at the end of 2008.
However, the global economic slowdown and the drop in commodity prices in the third quarter of this year combined with a falling demand for Latin American products, primarily from the United States and to a lesser extent the European Union (EU) and Japan, will lead to lower growth rates and less favourable trade balances in 2009.
The UN Economic Commission for Latin America and the Caribbean (ECLAC) report stressed that the looming recession and current credit crisis means that States in the region will have to deal with restricted access to external financing, higher interest rates, tumbling stock exchanges and a shift of capital to safer destinations, as well as lower remittances and direct foreign investment in the coming year.
But reforms made over recent decades have better prepared the region for the threatened global economic slump and financial meltdown, according to the report, launched in Mexico City by ECLAC Executive Secretary Alicia Bárcena.
It stressed that these reforms must be maintained, particularly those contributing to fiscal responsibility, control of inflation, freer trade, market diversification, debt reduction and the accumulation of international reserves.
In its report ECLAC recommended that regional governments undertake a series of measures to absorb the economic shocks felt around the world and reduce the impact felt on their economies. Its suggestions include reinforcing supervision of banks and financial institutions, maintaining the reforms and investing income from higher commodity prices to promote competitiveness, human resource development and export diversification.