For the first time in several years Latinamerica economic report will be positive with a 5,5% expansion in 2004, the highest in two decades since the 6% of 1980.
The magnitude of the surprising recovery, following a meagre 1,9% in 2003, is above all the most optimistic expectations, according to the preliminary report from the United Nations Economic Committee for Latinamerica and the Caribbean, CEPAL. However for next year CEPAL estimates that growth will be in the range of 4%.
A flourishing world economy and international trade expansion are among the main causes behind the improved performance of the region points out CEPAL.
World economy is set to grow 4% this year (compared to 2,6% in 2003) and trade will expand 9%, mostly pushed by the United States and Chinese economies which has caused a considerable increase in the price of commodities of which the region is a net exporter. This is particularly true for energy, metals and soybeans.
Jose Luis Machinea, Executive Secretary of CEPAL revealed that in eleven months of 2004, the region's exports expanded 22,4%, with a 10,4% increase in prices and 10,8% in volume. Imports on the other hand increased 19,8%, 14,4% in volume and 4,7% in prices.
However unemployment remains a headache since it has only dropped 0,7 from the 10% of December 2003.
Regarding risks in 2005, Mr. Machinea enumerated: United States "twin" imbalances, oil prices, deceleration of the Chinese economy and growing protectionism.
Consequences for Latinamerica are an increase in interest rates, slowing down of growth and a drop in the trade exchange terms. (Imports dearer and exports cheaper).
CEPAL estimates the world economy will expand 3,2% in 2005.
The countries with the greatest expansion in 2004 are, Venezuela 18%; Uruguay 12%; Argentina 8,2%; Brazil 5,2%; Chile 5,8%; Ecuador 6,3% and Panama 6%.