According to SELA
projections
Economic growth in Latin America and the Caribbean
expected at 0.6% this year
Caracas, 14 December - Economic growth in Latin America and the Caribbean is expected to
reach 0.6% by the end of the year 2001,.according to a preliminary report issued today by
Ambassador Otto Boye, Permanent Secretary of the Latin American Economic System (SELA).
The report, titled "Latin
America and the Caribbean: Economic results in 2001" and prepared by the
Permanent Secretariat of SELA, predicts that economic growth for the region will be
between 0.3% and 0.9%, whereas per capita gross domestic product at regional level is
poised to show a negative trend of -0.7% this year.
"This figure, which had previously dropped on two different occasions in the last ten
years (-0.5% in 1995 and -1.2% in 1999), is closely linked with the total economic growth
of the region, and in this regard, it shows a remarkably volatile relationship," said
Boye at a press conference held in the headquarters of SELA, in Caracas.
"The countries with a higher growth trend in the region are Ecuador, Chile, Venezuela
and Trinidad and Tobago. These countries are expected to report an economic growth of
about 3%. Brazil still shows a growth trend of 1%, but its final economic results will
depend on the impact of the situation in Argentina," Boye said.
According to preliminary projections made by SELA, a consultation and coordination system
that groups 28 Latin American and Caribbean countries, the inflation index for the region
as a whole would remain at 8%, while the current account balance would end the year down
at -4.2% of the gross domestic product.
In the case of Mexico - the second largest economy of the region after Brazil - the growth
trend in 2001 would be somewhere between recession and zero growth.
Among other economies showing relatively low economic growth trends are Panama, with 0.8%,
Jamaica, 0.4%, and Bolivia, 0.3%, the report says.
Boye explained that the report had only preliminary results because in many cases,
especially those of medium- and small-sized economies, the official data available
corresponded to the first and the second quarter of the year.
The document underscores that its estimates depend heavily on many key factors in the
region. At present, one of the greatest questions is how the main economic variables in
Argentina will end the year and what impact they would have on other markets.
"Argentina accounts for nearly 14% of the total regional production. In this regard,
it is important to point out that the economic recession in the country is expected to
continue, and that variables such as the risk-country qualification, the debt negotiations
and external refinancing will have an impact on investments, the current account and the
trade balance," it said.
Another key factor, according to the document, is the scope of the economic recession in
the U.S. Data released in early December indicate that the economic growth in the United
States was 1.3% in the first quarter of the year, 0.3% in the second quarter and -1.1% in
the third quarter.
The latter is the lowest figure seen in the United States since the economic crisis
dragged economic growth down to 2% in the first quarter of 1991. Harsh conditions in the
U.S. labour market would also affect U.S. dollars remittances to relatives in Mexico,
Central America and the Caribbean countries.
The impact of the U.S. economic crisis would be felt most intensively in Mexico, which
accounts for almost 24% of the whole Latin American and Caribbean economy. About 87% of
Mexican exports are destined to the U.S market.
Among other countries badly hit by the poor economic performance in the U.S. are those in
Central America and the Caribbean, because the U.S. labour market crisis in affecting U.S.
dollars remittances to relatives.
Total U.S. dollar remittances to Mexico are estimated to have reached $6.5 billion in
2000. As in the case of El Salvador, dollar remittances have allowed some stability in the
foreign exchange rates of many Latin American and Caribbean currencies.
Total open unemployment would average 12.3% at the end of the year, according to official
data available. This indicator tends to be relatively higher in medium- and small-sized
economies such as Uruguay, Ecuador, Guatemala and Dominican Republic, the report says.
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