MercoPress. South Atlantic News Agency

Latinamerica forecasted to grow robustly.

Latinamerica expanded a modest 1,7% in 2003 according to the International Monetary Fund six months World Economic Outlook released this week in advance of the coming IMF assembly scheduled to begin this Saturday in Washington.

IMF forecasts the region will grow 3,9% this year and 3,7% in 2005. Brazil, Mercosur largest economy is expected to expand 3,5% after a 0,2% contraction last year and Argentina will keep advancing, 5,5%, following the 8,7% of 2003.

Of the region's main economies Mexico seems to be the weakest with a growth prospect for this year of 3,3%, although a great advance from the 1,3% of 2003.

The fastest growing economy this year will be Venezuela, 8,8% after a dramatic fallback of 9,2% in 2003, a year plagued with social and political unrest plus a prolonged strike in the oil industry, the country's main source of income.

The Andean region countries, (Bolivia, Peru, Ecuador, Colombian and Venezuela) are jointly expected to manage a 5,5% expansion in 2004, ahead of Mercosur, 4%, and of Mexico, Central America and the Caribbean forecasted to grow 3,3%.

Uruguay, after a modest 2,5% last year is expected to manage a comfortable 7% in 2004 with sufficient strength to keep growing in 2005. In 2002 the Uruguayan economy suffering from Argentine contagion collapsed 11%. The IMF report indicates that Uruguay for the first time since 1998 has began an ascending course, but there are still risks ahead. "To ensure the confidence of world financial markets Uruguayan authorities must advance restructuring the banking system and consolidating the fiscal front", reads the IMF report.

Regarding Argentina the report praises fiscal measures and the overall performance of the economy but warns about lagging reforms in the banking system and public utilities services "which can be seen in the problems with energy supply the country is facing". IMF anticipates a 6,7% inflation in 2004, half of last year's and a current account surplus equivalent to 4,6% of GDP. In 2005 growth is forecasted to reach 4,5%, inflation 9,5% and the current account surplus, 1,6% of GDP.

The strong recovery of the Argentine economy in 2003 which reached 8,75% is attributed to domestic demand and construction, however overall production is still 11% below the pre-2001 crisis level.

IMF also points out that the sustainability of the Argentine recovery, particularly a significant GDP primary surplus above 3%, will much depend on reaching an agreement with private creditors who hold 88 billion US dollars in defaulted sovereign bonds. Similarly IMF recommends a new regulatory framework for public utility companies that have seen their rates frozen and turned into the local currency since 2001, and a legal system that guarantees contracts and protects private property.