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Financial News

Jul 2010 Financial News

Regional outlook still shaky for 2011

Jul 23, 2010

ALTHOUGH recovery from the global economic crisis has looked upon as one that has been relatively quick, particularly in certain sections of the Latin American and Caribbean region, there are lingering questions and doubts regarding the evolution of the global economy may dampen the regional outlook in the medium-term.

This was stated in the latest Economic Commission for Latin America and Caribbean (ECLAC) Economic Survey of Latin America and the Caribbean 2009-2010, released yesterday.
The report stated that the economic crisis in some European countries may have negative consequences on the volume and price of regional exports, as well as in the amount of remittances to Latin America and the Caribbean.

It pointed to the fact that in Ecuador, the fall in remittances may have a significant impact, given that remittances from Spain make up three per cent of Ecuador’s Gross Domestic Product (GDP).

Concern was also raised about some highly-indebted Caribbean economies, which are said to be already in a situation of great vulnerability.

It was reported that the average indebtedness of Caribbean nations reached approximately 50 per cent of GDP in 2009 and in some cases it is even higher, such as in Grenada (83 per cent) and Barbados (93 per cent).

It must be noted here however, that the majority of Barbados’ debt is domestic in nature, with foreign debt expected to account for approximately 13 per cent of GDP this year, and ten per cent of GDP in 2011, both of which are below the internationally agreed upon 15 per cent threshold.

The report stated that growth is expected to slow down around the second half of 2010, and argued that although the region will continue to expand in 2011, it will do so at only 3.8 per cent approximately, which is equivalent to a 2.6 per cent increase in per capita GDP.

With the exception of Chile and especially Haiti, given the need for reconstruction and recovery after the earthquakes that struck them earlier this year, economic deceleration in the region will be generalized, particularly in South America, whose 5.9 per cent growth in 2010 is expected to drop to 4.3 per cent in 2011.

Faced with this scenario, ECLAC is calling on countries in the region to maintain public policies geared at protecting the most vulnerable as part of a broader strategy that encompasses not only social areas but also macroeconomic and production policies. (RH)

Barbados Advocate
Friday July 23, 2010