Latin America and the Caribbean is consolidating its recovery from the global economic slowdown, posting higher-than-expected growth in recent months, although some countries in the region face serious pitfalls, according to a new United Nations report.
The 2009-2010 regional economic survey, conducted by the UN Economic Commission for Latin America and the Caribbean (ECLAC) and released today, forecasts that the region will expand by 5.2 per cent this year after the recovery began in the second half of last year. Overall unemployment rates are likely to ease from 8.2 per cent to 7.8 per cent.
But growth is forecast to slow to 3.8 per cent next year because of continued uncertainty about global economic prospects, especially in Europe, a potential fall in remittances to some countries and the risk posed by the high debts of some Caribbean countries.
Alicia Bárcena, ECLAC’s Executive Secretary, told the report’s launch today in Santiago, Chile, that this year’s growth rate is higher than expected.
“What stands out are the members of Mercosur [a South American trade grouping] and countries with greater capacity to implement public policies, as well as those with strong domestic markets spurred by regional activity and their exports to Asia,” she said.
Some of the region’s largest economies are driving the revival, according to ECLAC. Brazil is expected to record a growth rate of 7.6 per cent this year, while Uruguay (7.0 per cent), Paraguay (7.0 per cent), Argentina (6.8 per cent) and Peru (6.7 per cent).
Private consumption is on the rise again following the slight improvement in employment, while lending has also increased, as have investment and export revenue.
In its survey ECLAC found that macroeconomic policies by some governments in the region in the years before the global economic crisis have also assisted, ensuring that those countries have better public accounts, reduced debts and increased international reserves.
Yet other countries are continuing to struggle. Venezuela’s economy is forecast to contract by 3 per cent, there will be negative growth in several Caribbean nations as well and Haiti will endure a fall of as much as 8.5 per cent because of the catastrophic earthquake in January.
ECLAC warned that the patchiness of the economic recovery in other regions, particularly Europe, dampens the prospects of strong growth next year. The amount of remittances – which comprise a significant segment of the gross domestic product (GDP) of countries such as Ecuador – are likely to fall.
Many Caribbean nations also have high debt burdens which leave them vulnerable to economic problems in the months ahead. The debt owed by Barbados is equivalent to 93 per cent of its GDP last year and for Grenada the figure is 83 per cent.