Latinamerican countries with a greater link to China such as Chile, Brazil and Peru are moving out of the crisis faster and stronger according to a World Bank report which underlines the increasing significance of the Asian giant for the region.
“Those countries which have closer ties with Asia, particularly South East Asia and China are those showing the most vigour in their economic recovery”, pointed out Augusto de la Torre,World Bank Chief Economist for Latinamerica.
On the other hand those countries with lesser links to this new global development pole are recovering at a slower pace, said De la Torre who specifically named Mexico, a country with scarce links to China but strong ties to the US (almost 90% of Mexico’s trade is with its powerful northern neighbour).
The World Bank economist says that countries such as Chile already export more to China than to the US or to Europe. Besides Chile, Brazil and Peru, other countries such as Colombia, Argentina, Costa Rica and Uruguay also have increasing close links with China, both in trade and investments.
De la Torre underlined that China’s influence is not only evident in bilateral trade with these countries but also through its “enormous effect” on commodities’ prices. He pointed out that Latinamerica is a large exporter of commodities and 93% of the region’s population lives in countries which benefit directly when international prices of farm produce and minerals increase.
The economist presented a report on Latinamerica’s recovery which is to be considered over the weekend during the biannual assembly of the IMF and World Bank taking place in Washington. The report outlines the satisfactory performance of the region during the crisis and the fact that its evolution has been more solid and sustained than in other emerging markets such as East Europe.
“Economic contraction has been less than in previous crisis and the surge in unemployment was also more contained than in previous crisis, the region weathered the slowdown effectively and was among the first to rebound from the global slowdown”, said De la Torre.
The report is included in IMF’s “World Economic Outlook” which estimates that overall Latinamerica’s economy will expand 4% this year.