MercoPress. South Atlantic News Agency

Latam growth prospects slowdown in rest of 08 and 09

Latin American and Caribbean economies will start to slow in the second half of this year and possibly into 2009 because of the rise in oil and food prices, the United Nations Latinamerican Economic Commission, Cepal said on Friday.

Closing the XXXII session period Cepal secretary general Jose Luis Machinea said the credit crunch in developed countries triggered by the collapse of the housing market in the United States, together with the rise in energy and food costs, "will have a serious impact on the region". Those countries that export the most to the United States will suffer the most, he told reporters, but those countries that relied on sales to other areas like Japan and Europe would also face declining sales. "All of this will result in the region growing more slowly in 2009 than in this year," Machinea said at the end of the Cepal meeting in the Dominican Republic. "We have said that all this will start affecting the region's growth in the second half of this year and that this will continue in 2009" Machinea insisted. Machinea has previously said a likely soft US recession would have only a minor impact on Latin America. Nevertheless Cepal cut its regional growth forecast to 4.7% for 2008, compared with 5.7% in 2007. On Friday, Machinea said he could not forecast the extent to which regional growth would be affected by surging oil and food prices in the second half of the year, as that depended on the extent of the global economic slowdown. "What we do know is that we are experiencing a moment in which these prices are at a peak, but that we may possibly see a reduction in these prices in the next few months because it is difficult to see these prices staying at today's levels if world economic growth slows down," he said. Machinea said that currently "we are in the peak of the crisis" and consequently "we'll be seeing high prices, but no that high". But he added this should not fill us with relief because the impact of high food and energy costs could be "devastating" to some countries, especially on their poorest sectors.