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Latinamerica exposed to European slowdown, but not Brazil, forecast experts

Tuesday, June 1st 2010 - 01:39 UTC
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Antonio Prado, Deputy head of Cepal Antonio Prado, Deputy head of Cepal

The United Nations Economic Committee for Latinamerica and the Caribbean, Cepal, anticipates that growth in the region will be less than in previous years because of the economic downturn in developed countries but the tendency should not influence Brazil, the region’s largest economy.

“Certainly the instability in the US and the European Union will have an impact in the region’s economies, but we don’t know how much”, said Antonio Prado, Cepal Deputy Secretary General.

However Latinamerican and Caribbean economies will be growing above the world average, said Prado interviewed by Brazil’s official news agency, Estado.

The slowdown will push nine million Latinamericans back to poverty in spite of having left that condition in recent years when the region expanded vigorously.

Nevertheless because of that strong expansion until late 2008 when the world slowdown officially started, the percentage of Latinamerican and Caribbean population living in poverty conditions was cut from 44% to 33%, according to Cepal.

Economist Prado cautioned that Latinamerican countries are loosing ground in world trade to an advancing Asia and to Africa. One of the reasons for the Asian advance is the quick technological modernization pace of productive systems.

Cepal is currently holding its 33rd period of ordinary sessions which is set to conclude with a speech from President Lula da Silva on Tuesday.

But Brazil, with the region’s largest GDP, will not follow the regional tendency and is forecasted to experience a robust expansion this year, according to most economists and experts at the meeting that also underscored Brazil’s proven capacity to address the global crisis.

In related news a report from the country’s largest private bank Itaú-Unibanco showed that Brazil’s GDP expanded 3% in the first quarter of this year over the last quarter of 2009, which represents an annual growth of 12.4%, the second highest in the world.

“Brazil has tasted the pleasure of growing 5%, and of growing 6%, but we don’t want to overdo it…we want sustainable growth with inflation control”, said President Lula da Silva during a visit to Rio do Janeiro.

Two weeks ago Brazil’s Finance minister Guido Mantega announced a package of measures to slow economic growth and thus avoid an inflationary sprint.

Experts also pointed out to the fact that Latinamerica did not experience the burden of the world crisis because China has become the main trade partner for most countries in the region.

Several countries also attribute the good performance to domestic market stimuli policies which helped contain the negative effects of the world crisis that begun at the end of 2008 and expanded to the whole globe.

But good performance does not come free of criticism.

Alicia Barcena, Cepal Secretary General warned about the risks for Latinamerica of changing its historic trade dependency from the United States for an unfavourable trade relation with China.

“Latinamerica should not be jumping from one dependency to another” said Barcena.

 

Categories: Economy, Politics, Latin America.

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