MercoPress. South Atlantic News Agency

More wealth and poverty in Latinamerica.

For the first time in decades Latinamerica will end 2003 with a trade surplus and next year all the economies of the region should expand. However income per capita remains below the 1997 level and 44% of the population live in poverty, according to the latest preliminary report from the Economic Commission for Latin America, CEPAL, a regional United Nations office.

Latinamerica's economy overall expanded 1,5% in 2003 and for 2004 the forecast is 3,5% given the strong US and Japanese recovery and excellent performance of the Chinese economy. The region's GDP actually dropped 0,4% in 2002.

The CEPAL report indicates that in 2003, Argentina experienced a strong 7,3% recovery after contracting 10,8% in 2002.

Chile, Costa Rica, Colombia and Peru grew above 3%, but Brazil hardly managed 0,1% and the Mexican economy a mild 1,2%.

Venezuela in 2003 contracted 9,5% after a similar phenomenon in 2002. In the rest of the region's economies "dynamism was scarce and reflected in growth rates below 2%".

According to CEPAL the recovery is still insufficient to revert stagnation in the last few years and per capita income is 1,5% below 1997.

Actually after six years of negative per capita growth and stagnant labour markets, 44,4% of the population equivalent to 227 million people, live below the poverty line with unemployment remaining high at an average of 10,7%.

In Central America, the Andean Community and Chile overseas sales increased 5% and in Mercosur 17,9%.

The combination of greater volumes and better prices turned 2003 into a record surplus trade year with 41 billion US dollars. And for the first time in half a century the current account balance of Latinamerica was positive, 6 billion US dollars.

Foreign Direct Investments continued to contract and reached 29 billion US dollars in 2003, 25% below 2002. However remittances from expatriates represented 33 billion US dollars benefiting particularly Mexico, Central America and the Caribbean.

The report also points out that the region received compensatory funds equivalent to 22 billion US dollars mostly from the IMF with an increase of international reserves of 32 billion US dollars.

Inflation continued to drop in 2003 in most Latinamerican countries with an average 8,5%.

The exchange rate appreciated against the US dollar in the Southern Cone after the devaluations of 2002. In Central America and Mexico local currencies began a slow depreciation process.

CEPAL estimates that the overall strengthening of domestic finances following the turbulences of previous years, stringent fiscal and monetary policies plus more realistic currency exchange rates anticipate a positive 2004 with an average growth above 3,5%.

After several years of receding, real salaries are expected to grow favouring consumption and employment.