MercoPress. South Atlantic News Agency

Good prospect for Latinamerica in 2006

The Latinamerican economy is set to grow between 4 and 5% in 2006 favoured by a positive trade balance and a major influx of investment forecasted Friday a high official from the Inter American Development Bank in Washington.

"The Latinamerican economy is particularly strong with good export volume, low interest rates, which should attract capitals to the region, helping the economy to comfortably expand 4 to 5% next year", said economist Carlos Calvo during a debate in Santiago sponsored by the Chilean Central Bank.

"If the current conditions continue to be favourable, inflation under control, good savings, I believe Latinamerica must be ready for an "invasion" of foreign capital", added Mr. Calvo. Latinamerica is forecasted to expand 4/4,5% in 2005 given the sustained world demand for commodities and a greater domestic demand dynamism particularly investments.

Mr. Calvo argued that capital will be attracted to Latinamerica because contrary to expectations long term interest rates have remained stable and low, and "this has investors nervous".

This factor together with an interesting savings rate in the Asian countries and their growing need for commodities will open the door for the forecasted influx of fresh investments.

"This excess saving rate hopefully will increasingly be looking towards Latinamerica. This will mean more investments, more credit and therefore more consumption", stressed Mr. Calvo who nevertheless cautioned Latinamerican countries to keep "fiscal policies tight".