Latin America and the Caribbean will maintain the recovery that began in the second half of 2009 following the international economic crisis, and will grow by 4.7 percent thanks to the boost of internal demand. The Caribbean region specifically will see a mere 1.9 percent growth, however.
That’s according to a report from the Economic Commission for Latin America and the Caribbean (ECLAC).
In the Economic Survey of Latin America and the Caribbean 2010-2011, presented yesterday by the Executive Secretary of the United Nations body, Alicia Bárcena, ECLAC points out that this growth implies a 3.6 percent rise in per capital GDP, and declares that the current situation calls for close attention to be paid to the macroeconomic policy challenges that will be facing the region.
"How prepared is Latin America and the Caribbean for managing economic growth? We must recover the fiscal space in order to be able to take measures to ensure sustained growth with productive employment and equality,” said Bárcena.
In 2011, regional growth is mainly being driven by private consumption, which is attributable to improved labour indicators and increased credit, the report said. At the same time, it adds, the fact that idle productive capacity is being used up to sustain internal demand is pushing up investment, which is benefiting from greater credit availability to return to pre-crisis levels.
According to the report, growth will also have a positive impact on the region's labour market, which means that the unemployment rate may fall from 7.3 percent in 2010 to between 6.7 percent and 7 percent in 2011.
ECLAC says that as in previous years, the region has three-tier growth. On the one hand, the highest growth rates are in South America, which will grow by 5.1 percent in 2011, on the back of a significant improvement in its terms of trade by virtue of higher prices for its commodity exports (its specialization). Meanwhile, Central America will grow by 4.3 percent and the Caribbean by 1.9 percent.
In terms of countries, the fastest growing this year will be Panama (8.5 percent), followed by Argentina (8.3 percent), Haiti (8 percent) and Peru (7.1 percent).
In the Economic Survey 2010-2011, ECLAC states that rising international food and fuel prices, in a context of higher internal demand, have given rise to inflationary pressures. As a result, several of the region's countries have toughened their monetary policy, which has increased the difference between internal and international interest rates. In a context characterized by extremely high external liquidity, this may lead to exchange rate appreciation in the region.
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