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Cautious optimism in Latin América

Saturday, December 16th 2006 - 20:00 UTC
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Four years of regional growth Four years of regional growth

Governments in Latin America and the Caribbean expect a fourth straight year of economic growth in 2006, topped by a jump of 12.5 percent in Cuba, according to a report issued Thursday by the UN economic agency for the region.

The region-wide domestic growth estimate of 5.3 percent for 2006 notably outpaces population growth, leading to a surge of 3.8 percent in per-capita GDP. Overall national incomes rose even faster â€" by 7.2 percent â€" because of increased remittances from abroad and improved terms of trade on increasing exports such as oil and metals. Exports were up, inflation was down, remittances rose and unemployment declined, according to the preliminary report. ''The region has again performed well in comparison with past periods, but it continues to fall short of other developing regions,'' the Economic Commission for Latin America and the Caribbean said in a preliminary report. The former Argentine economy minister who heads ECLAC, Jose Luis Machinea, expressed ''optimism with caution'' as he presented the report at its headquarters here. Overall gross domestic product was expected to improve from last year's 4.5 percent rate, but is projected slow again to 4.7 percent next year, according to the report. If that projection holds, per-capital income for the region would have increased by 15 percent between 2003 and 2007. The report said domestic demand rose by seven percent across the region, with gross domestic investment up by 10.5 percent and consumption by six percent. Overall regional merchandise exports rose by 21 percent â€" topping the 20 percent rise in imports â€" while net remittances and other transfers rose by some US$9 billion. Machinea expressed caution because of uncertainty about the international economy and questions about the sustainability of the growth. The US economy is projected to slow next year. While Cuba's reported GDP rate topped the region, some other Caribbean states also did well: 12 percent for Trinidad and Tobago, 11 percent for Antigua and Barbuda and 10 percent for Venezuela and the Dominican Republic. South America's largest economy, Brazil, estimated GDP growth of just 2.8 percent while Mexico estimated domestic growth of 4.8 percent. None of the countries expected an economic decline this year, though Guyana estimated GDP growth at just 1.3 percent. Machinea said that if next year's projected growth holds at 4.7 percent, ''poverty should continue to diminish, but that depends on the social programs'' applied by governments. The report showed narrower overall fiscal deficits and slowing inflation â€" down to 4.8 percent from 6.1 percent last year. Across the region, local currencies appreciated by an average of 3.5 percent against outside currencies. And open unemployment fell slightly to 8.7 percent from last year's 9.1 percent while real wages in the formal, tax-paying sector rose by an average of three percent across the region.

Categories: Economy, Mercosur.

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