The good performance of the global economy is working for the economies of Latin America and the Caribbean pass through a time of high growth. Thus, the region is expected to grow 5% this year and 4.6% in 2008, after growing by 5.6% in 2006.
So says the ECLAC in its report Economic Survey of Latin America and the Caribbean 2006-2007 , released today in Santiago de Chile by its Executive Secretary, José Luis Machinea . According to the document confirmed the forecasts until 2008, the region will end six years of consecutive growth, since 2003 - in which the per capita accumulate an increase of 20.6%, equivalent to an average rise of more than 3% annually.
According to ECLAC , it is expected that in 2007 South America as a whole will grow 5.7%, while Central America and Mexico at 3.6% would do so. For the Caribbean subregion is projected to grow 5.5%.
According to the report, in 2006 the growth phase through the region was characterized by the existence of parallel surpluses in current account balance of payments and public sector primary balance.
These surpluses have been boosted by the strong recovery in the terms of trade, equivalent to 3.4% of GDP, especially in the countries of South America. Improved terms of trade have contributed to increasing trade balance surplus and boost revenue.
Moreover, in 2006 the export volume of goods and services in the region grew by 7.3%. This dynamic was helped by the growth of U.S. economy in the case of Mexico and the persistent foreign demand for raw materials exported by countries de América Latina y el Caribe, a lo que se sumó el incremento de la actividad económica y de la demanda interna de la región, con lo cual se impulsó el comercio intra-regional de productos manufacturados. En tanto, el volumen importado de bienes y servicios creció un 14,2%.
Este panorama positivo en materia de actividad económica permitió además una mejora en el mercado del trabajo. No sólo disminuyó la tasa de desempleo regional, de un 9,1% en 2005 a un 8,6% en 2006, sino también mejoró la calidad de los puestos de trabajo.
En promedio, América Latina y el Caribe registró una tasa de inflación de 5% en 2006, luego scoring a 6.1% in 2005. Brazil experienced the largest drop in this index (from 5.7% to 3%).
Another positive aspect highlighted by the report is the reduction of vulnerability of the countries of the region, thanks to a significant reduction in external debt burden, both in relation to GDP (from 26% to 22%) as regional exports (from 101% to 84%), and increased its international reserve assets of around 57,000 million dollars.
However, not all countries have benefited from favorable external environment. Specifically, compared with the economies of America South, the nations of Central America and much of the Caribbean (except Trinidad and Tobago and Suriname) had a less positive terms of trade and current account and a slower growth of gross national disposable income and investment, as well as fiscal imbalances and increased external vulnerability.
Outlook for 2007
According to ECLAC , it is possible to maintain a cautious optimism for the near future, due to the evolution shown by the international economy and the relative strength of economies the region. However, it notes with concern the recent increase in volatility in international financial markets.
investment remains the main driver of demand, while private consumption will recover, but is expected to grow again in 2007 unless the national income, which implies a further increase in national savings. Another development is the decline in the unemployment rate, projected at 8.3% for 2007, similar to the beginning of the nineties. On the other hand, while average inflation was stable in the first months of 2007, is accelerating in many countries because of pressures from both the demand and from supply. The ECLAC notes that the investment rate is still low compared to the levels required for sustained high economic growth over the medium term. To support this expansion, the region also needs to develop fiscal policies cycles.
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