Latin America over worst of crisis

Pastor Landívar

Thursday, Oct. 1

LATIN AMERICA - World Bank Chief Economist for Latin America Augusto de la Torre told EFE that although Latin America's economy as a whole is expected to shrink by 2 percent this year, the region is on the road to recovery. "The worst of the crisis is over," he said.

World Bank (WB) figures show that much of the contraction can be traced to Mexico, whose economy, like that of several Central American and Caribbean countries, crumbled under the strain of the global financial crisis.

These countries have close commercial ties with more developed economies, and remittances from emigrants are a significant source of income. Both trade and remittances fell sharply in 2009, and on top of that, their economies were ravaged by the swine flu pandemic. The WB, though, according to AFP, expects them to stage a strong recovery in the first half of 2010.

The WB report, as published by EFE, separates Latin America into three groups. The first group, including Bolivia, Peru, Panama and Uruguay, consists of nations whose economies are expected to grow by an average of 2 percent in 2009. The second group, including Brazil, Colombia and the Dominican Republic, consists of nations with economies that will shrink by less than 1 percent. The third group, which includes Argentina, Chile, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras and Nicaragua, consists of nations whose GDP will fall by between 1 and 3 percent.

De la Torre added that if Mexico were excluded, there would be hardly any contraction in regional GDP this year. He also pointed out that the severity of the contraction depends on the openness of a country's economy and its dependence on trade with the world's great powers. He gave Brazil as an example - the country is slightly more protectionist than Mexico and was able to ride out the crisis on the back of its booming trade with China.

Brazil's former Trade and Industry Minister Sergio Amaral told AFP that the challenge is to secure a sustainable economy, but he also warned that the road ahead is still uncertain. In fact, he did not rule out a few blips in the region before the economy makes a full recovery.

Bolivian Planning Minister Noel Aguirre was more optimistic, telling El Deber that his country's GDP grew by more than 3.8 percent in the first half of 2009 - the highest rate in the region.

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