Jul 2010 Financial News

Caribbean region expected to see positive growth

Jul 23, 2010

ECONOMIC recovery in the Latin American and Caribbean region is expected to manifest itself with positive growth being recorded this year, however, when broken down Caribbean countries are still expected to be returning negative performances.

According to the latest forecast released yesterday by the Economic Commission for Latin America and Caribbean (ECLAC), the region as a whole has consolidated its economic recovery as of the latter half of 2009 and it project to grow by 5.2 per cent this year, resulting in a 3.7 per cent rise in per capita GDP.

“This growth rate is higher than expected, but economic performance in the region is very diverse. What stands out are the members of Mercosur 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,” stated ECLAC Executive Secretary Alicia Bárcena, who spoke at the launch of the report Economic Survey of Latin America and the Caribbean 2009-2010.

The survey showed that the highest growth rates in 2010 are expected to be in South America, led by the biggest economy in the region, Brazil, which is expected to grow 7.6 per cent, followed by Uruguay and Paraguay, each with seven per cent, and Argentina, and Peru, with 6.8 per cent and 6.7 per cent respectively.

Other countries in the region are projected to have lower growth rates, such as the Dominican Republic, with six per cent, Panama, five per cent, Bolivia 4.5 per cent, Chile 4.3 per cent, and Mexico with 4.1 per cent.

Colombia is also projected to grow by 3.7 per cent, Ecuador and Honduras 2.5 per cent, Nicaragua and Guatemala two per cent, while Venezuela is expected to experience negative growth of three per cent.

Due to the devastating earthquake experienced in January of last year, the Haitian economy is forecast to fall by some 8.5 per cent, while, as indicated earlier, a number of Caribbean nations are expected to continue to see negative growth as was the case in 2009.

The fact that growth is expected overall for the Latin American and Caribbean, as well as the fact that those countries experiencing negative growth would have managed to improve somewhat since last year, is a testament to the fact that the region is seeing greater economic activity. This has subsequently reduced the level of unemployment throughout the region, which is expected to drop from 8.2 per cent in 2009 to 7.8 per cent this year.

The survey argued that the consolidation of some of the region’s economies this year is a result of three factors, these being private consumption, which reacted positively to the gradual improvement of employment and greater lending, higher investment and to a lesser extent, an increase in exports.
Secondly, the swift economic recovery following a crisis of proportions rarely experienced in modern economic history has been driven largely by public policies.

While the final factor relates to the macroeconomic soundness observed in most countries of Latin America and the Caribbean in the years preceding the global crisis, which were said to have made a significant difference.
It was stated that Governments made the most of a period of exceptional international economic and financial boom to straighten their public accounts, reduce and improve the profile of their debts and increase their international reserves.

This process allowed them to apply countercyclical public policies that contributed to economic recovery starting the second half of 2009.
Fiscal and monetary stimulation programmes, receding uncertainty, the relative normalisation of financial markets, greater access to loans and a more dynamic world economy led to a gradual recovery throughout the year, with this process consolidating in 2010. (RH)


Source:
Barbados Advocate
Friday July 23, 2010

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