MercoPress. South Atlantic News Agency

Uncertainty and pessimism in Latinamerica

War in Iraq will affect the already stagnant Latinamerican economy said Enrique Iglesias president of the Inter American Development Bank, IDB, during the opening ceremony of the 44th IDB annual assembly held in Milan, Italy.

"The immediate prospects for the world economy and for the region are of great uncertainty and questioning, ?.that become even greater given the complex situation in the Middle East", said Mr. Iglesias addressing 3,000 government and corporation delegates.

Mr. Iglesias added that if the current situation doesn't worsen, the regional economy could grow between 1,5 and 2% this year, and if the tendency holds, growth rate could reach 4% in 2004".

Further on the IDB president stressed that Latinamerica and the Caribbean have a "monumental" challenge before them, with the objective of building modern nations with more egalitarian societies. A long term target as the history of most post-industrialized nations has proved".

"We need a long term vision to face the current uncertainties and questionings, which demand a doubling of efforts to reach growth levels capable of reducing poverty and easing social tensions".

According to the IDB report released during the Milan assembly Latinamerica lost half the decade of the nineties after having remained stagnant during the "lost decade" of the eighties.

"Per capita income of the Latinamerican population is today less than five years ago, consumption is stagnant and investment has dropped to its lowest in the last ten years", points out the report.

Mr. Iglesias pointed out that a feeling of pessimism predominates in the region given the current economic situation and "there are sufficient reasons to understand the social unrest after five years of GDP per capita reduction".

The IDB annual report indicates that five countries were the most affected by economic contraction ranging between 8 and 12%, Argentina, Venezuela, Uruguay, Paraguay and Haiti.

However the International Finance Institute predicts that while this year Venezuela's economy will continue to contract (10%), Argentina will finally begin to recover from the long four years recession.

IFI estimates that net private investments into the area dropped in 2002 to 28 billion US dollars, a 50 billion US dollars decrease compared to 1996/98. Unemployment in several countries is now above 15% and the regional average increased another point in 2002 and stands at 9,1%.

Poverty statistics

The economic situation of Latinamerica and the Caribbean and its impact on poverty were analyzed in Milan during the IDB annual assembly by the Secretary General of the Organization of American States, OAS, Mr. Césat Gaviria.

According to OAS the percentage of people in the region living with a maximum income of two US dollars per day, and which had dropped from 48,3 to 42% in the nineties, rebounded in 2001 reaching 43% and 44% in 2002.

Extreme poverty (defined as one dollar income per day or less), that had dropped from 22,6 to 17,8%, increased to 18,6% in 2001 and is believed to be standing at 20% in 2002.

Of the 523 million population of Latinamerica and the Caribbean, 214 million live in poverty, and 88 million of them in extreme poverty with a 6 million increase during 2002 according to the United Nations Economic Committee.