MercoPress. South Atlantic News Agency

Latinamerica foreign trade forecasted to contract 9 to 11% in 2009

Alicia Bárcena, Head of Cepal optimistic in spite of some poor showings in the region.

The main impact for Latinamerica of the global financial crisis and economic slowdown has been the contraction of trade, so far in the range of 9 to 11%, revealed Alicia Bárcena, Executive Secretary of the UN Economic Commission for Latinamerica and the Caribbean, Cepal.

“The strongest impact we are seeing in the region is the fall in trade volumes. I believe that the “shock” of the contraction of global demand for our goods and services is our most relevant issue”, said Bárcena in an interview with the Cuban daily Granma.

“Although the situation surprises us when we have a stronger standing, the region is not immune to the crisis and the World Trade Organization considers that our trade volume has dropped 9%, while other international organizations put it at 11%”, she added.

In the financial area the effect on Latinamerican and the Caribbean has also been significant, but less complex, because the region this time has healthier financial systems and a more regulated banking sector”, added the economist.

She recalled that when the last big crisis Latinamerica’s foreign debt was equivalent to 24% of GDP, while in 2008 it had dropped to 8%.

Bárcena also pointed out that the global crisis has an additional impact for countries such as Mexico, Central America, the Caribbean, since remittances and tourism have plunged. “And in the case of Mexico worse still because of the A/H1N1 influenza epidemic”.

The region is forecasted to contract 0.3% in 2009, according to Bárcena who quoted data from Cepal, which will the first “negative percentage following six years of sustained growth”.

“We even believe it could drop a little bit more, precisely because the Mexican economy has a considerable influence in the calculation and they are having serious problems”, added Barcena.

However the great challenge for the region is keeping jobs. In six years unemployment in Latinamerica and the Caribbean fell from 11% in 2003 to 7.6% in 2008, “but could climb an additional point” as a result of this year’s performance.