Article Courtesy from Business Panama

World Bank Predicts Latin American Economies To Grow Over 4 Percent

Latin American economies will grow 4.7 percent this year, faster than previously forecast, driven by demand for commodities and low financing costs, according to Guillermo Perry, the World Bank's chief economist for Latin America.

Perry said that Latin America has high prices for export products, international liquidity and low financing costs, and growth in at least two important markets, the US and Asia. A surge in prices for copper, iron and oil is helping Latin American nations such as Mexico, Venezuela and Chile increases exports. Improved government fiscal policies also have bolstered growth, Perry said. Brazil, South America's largest economy, increased its so-called primary surplus in 2004, which excludes interest payments, demonstrating its willingness to cut debt.

''Countries have improved their domestic policies in the last few years,'' Perry said. “They have less vulnerabilities, they have less financing needs, the fiscal situation has improved, and monetary and exchange rate policies, making progress in general in all areas. So countries are in a better condition to better take advantage of this environment abroad.'' He added that growth will slow in 2005 to 3.7 percent because commodities prices may decline from record highs.

Meanwhile, Xinhua reports that two million, or 1 percent of the Latin American population, are expected to leave poverty this year, thanks to economic growth in the region, a report issued by the Economic Commission for Latin America and the Caribbean (CEPAL) released early December showed.

The report predicted the number of the poor in 2004 would be 224 million, or 43.2 percent of the total population, approximately the same level as that of 2001. The report put the number of people living in extreme poverty at 98 million, or 18.9 percent of the total population. However, CEPAL Executive Secretary Jose Machinea said that although the region has made moderate advance in poverty- elimination, it still will have more poverty-stricken population in 2004 than in 2000, when its poverty-stricken population stood at 207 million.

According to the CEPAL report, Chile is the only country that has met the United Nations' Millennium targets on eliminating extreme poverty, followed by Brazil, Ecuador, Mexico, Panama and Uruguay. However, in 2004, Argentina, Paraguay and Venezuela are expected to have more people living in extreme poverty than in 1990.

The report also indicated that after the migration fever in the 1990s, over 20 million Latin Americans live outside their countries of birth, with fifteen million of them living in the United States. Though the migrants bring in large sums of dollars, the loss of human capital and the lack of protection for human rights of overseas citizens are a reason of concern for the governments in the region.

Reuters also reports that the CEPAL report says that while there is a slight decrease in poverty in Latin America, poor distribution of wealth means that economic growth has done little to benefit millions of poor people. The gap between rich and poor keeps getting wider, the report said, and Latin America has the most unequal wealth distribution of any region on the globe.

The Latin American export boom is not translating into a boon for poor people, Machinea said. In Latin America, unlike Asian countries, gains reaped from economic growth are not being invested back in communities. The country with the worst distribution of wealth was Brazil, Latin America's economic powerhouse that this year is expected to grow 3.7 percent, followed by Argentina, whose economy will expand about 7.1 percent, and Honduras, with estimated economic growth of 3.5 percent. Machinea said that the poor distribution of wealth affects growth, governance and poverty.


Article Courtesy of Business Panama
The American Chamber of Commerce (AMCHAM)
and Deal Inc.
 

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