Global recession to have lasting impact on Latin American economies – UN

Higher unemployment figures, lower economic growth, falling trade and stubborn fiscal deficits are among the lingering effects the global financial crisis will have on Latin American countries, the top United Nations official for the region warned today.

The after-shocks of the global meltdown have infected the region through a sharp decline in remittances, shrinking external demand for goods and services and changes in the relative price of exports, said Alicia Bárcena, Executive Secretary of the UN Economic Commission for Latin America and the Caribbean (ECLAC).

Ms. Bárcena highlighted trade as one of the hardest hit sectors in the region, in her opening address to the 2009 Summer School on Latin American Economies, whose theme is “The Real Impact of the Global Economic Crisis: A Latin American Perspective.”

In April, trade was slashed by almost 32 per cent compared to the same month in 2008, with a 29.2 per cent drop in exports and 34.6 per cent decrease in imports during the same period, Ms. Bárcena told the gathering at ECLAC headquarters in Santiago, Chile.

She added that a cut in foreign direct investment of between 35 and 45 per cent is expected this year, while unemployment is estimated to climb to 9 per cent and money sent home by nationals living and working outside the region will fall by some 5 to 10 per cent.

Although there are signs of economic recovery, it will be a slow, gradual process, Ms. Bárcena warned the some 29 post-graduate students from Argentina, Belgium, Bolivia, Canada, Korea, Chile, Ecuador, France, Italy, Mexico and Spain, who will complete the ECLAC seminar on 30 September.

During the economic recession in the 1980s, it took 12 years for economies in the region to recover but as long as 24 years for social indicators to reach their pre-crisis levels, she said, predicting that the future comprises of lower growth in developed countries, more participation of developing countries in global growth and stricter regulations on financial systems.