Press Release No:2012/294/LAC.Washington: February 28, 2012 – Five million mothers, and children ages 0 to 6, are benefiting from World Bank (WB) programs developed throughout the Latin American region, under the Early Childhood Initiative: An investment for Life, the multilateral bank announced today.
After two years of operation, the initiative has approved US$400 million worth of projects, doubling the initial projected funding, and surpassing the original total commitment of US$300 million for the period 2010-2013. It has also expanded the number of targeted children who were able to benefit in the first year of operation.
The initiative seeks to implement comprehensive, well articulated and efficient Early Child Development (ECD) policies and programs in order to ensure all children a full opportunity to succeed later in life. Currently the initiative supports ECD programs in most countries in Latin America, either through lending programs, grants or technical assistance.
“Doubling down” on early childhood development shows countries in LAC recognize that investing early is investing smartly. ECD is not only good for children, it also provides a high payoff for societies and the economy. Those first five years of life decide the future of a child and its ability to interact in society as an adult,” said Hasan Tuluy, the newly appointed World Bank Vice President for Latin America and the Caribbean. “
The Early Childhood Initiative: An Investment for Life was launched two years ago at World Bank headquarters by WB President Robert B. Zoellick and Shakira Mebarak’s ALAS Foundation.
The initiative is designed to help reduce inequality among children. It supports efforts that help ensure children get the attention, nutrition and stimulation they need, from ante-natal care through to entering school.
Roadmap to success
The Bank is working with governments to ensure that ECD programs are well coordinated across the relevant entities so each puts in place an integrated package of services (health, nutrition, education, etc).
According to Keith Hansen, Human Development Director in LAC “each project has a unique formula for how best to invest in children. Projects form partnerships with various levels of government and civil society, across all social sectors, and are aligned with national circumstances.”
Country highlights:
Argentina: The World Bank has been supporting Plan Nacer, Argentina's results-based approach to reducing infant and maternal mortality. A package of basic interventions is provided to provincial pregnant women and children under six. Today, there are more than 1.7 million beneficiaries of the program.
Brazil: Services in 28 Brazilian municipalities across 10 states have been mapped in a user-friendly web format www.bemtevibrasil.com, and two interstate exchange workshops organized.
Belize: Belize’s District of Toledo has the highest rates of poverty and nutritional deficiencies among all districts in the country, affecting mostly the indigenous Mayan population. To address this challenge, the World Bank through a Japanese Social Development Fund (JSDF) Grant is helping the Government use an ECD approach to address the continuum of childhood development at the community level.
Bolivia: The Bank and Japanese government-funded program supports a series of interventions in the poorest and most vulnerable urban districts, particularly linking employment for young mothers and quality childcare. The program also helps the Government of Bolivia to improve the quality of existing childcare services, strengthen the capacity of government officials to monitor and evaluate projects. Project implementation is scheduled for 2012.
El Salvador: The Salvadoran program aims to protect and enhance the human capital of very young children residing in violence–prone urban areas, particularly protecting urban children from the food crisis. An estimated 35,000 poor and vulnerable mothers and young children will benefit from continuous support from the grant for a period of three years.
Honduras: The Nutrition and Social Protection Project in Honduras is a community-based initiative that helps to combat malnutrition in the country's poorest communities. The program employs NGOs to train community volunteers who in turn work with local mothers to teach them about proper hygiene, advantages of exclusive breastfeeding, and the importance of growth monitoring. The volunteers also weigh and measure children 0-2 years old to ensure they are growing properly.
Peru: In Peru, the Bank is supporting the Juntos program, to support the demand, supply, and governance of nutrition services provided by the Government. The program reaches about 60,000 families living in Peru's poorest districts.
Contacts:
In Washington: Marcela Sánchez-Bender, + 1 (202) 473-5863, msanchezbender@worldbank.org
In Mexico: Fernanda Zavaleta, 52-55-5480-4252, fzavaleta@worldbank.org
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Showing posts with label latin america. Show all posts
Showing posts with label latin america. Show all posts
Monday, March 5, 2012
Thursday, January 19, 2012
Population ageing, intergenerational transfers and social protection in Latin America and the Caribbean
Countries in Latin America and the Caribbean are in the midst of a period of profound demographic change which will lead to a dramatic shift in the age structure of the population, with sharp declines in the proportion of children and increases in the proportion of older persons. Though they are at different stages in this process, the majority of countries in the region are currently in the midst of the period of the demographic dividend, which is characterized by a relative increase in the number of working-age people relative to those who are dependent upon them. However, sooner or later this favourable situation will end due to the rising demand for resources on the part of a progressively older population. The transition to economically-aged societies in Latin America and the Caribbean —in contrast to that of the more developed countries— will take place in a context of high and persistent levels of inequality and of lower per capita income and less developed political and financial institutions.
This new situation will pose unprecedented challenges to Latin American and Caribbean society and will require adjustments in diverse areas, especially in health and pensions. Ideally public policies should anticipate demographic changes, redesigning the financing mechanisms for social protection systems so that the increased pressure on public and private spending can be sustained financially without reducing the coverage and quality of benefits.
The social and economic impacts of changes in the age structure of the region’s population are the subject of ongoing reflection in the Population Division of the CELADE - ECLAC. In particular, the Division has been participating over the past two years in an international effort to measure national economic activity by age, in the context of the international project on National Transfer Accounts (NTA) led by professors Ronald Lee of the University of California, Berkeley, and Andrew Mason of the East-West Center in Honolulu.National Transfer Accounts (NTA) estimate the flows of economic resources between different age groups in a way that is consistent with national income and product accounts. These flows mainly arise due to the fact that children and the elderly tend to consume more than they produce from their work and therefore tend to depend on resources that mainly come from the working-age population to satisfy their consumption needs.
In addition to distinguishing between the different types of flows (capital accumulation, transfers and credit transactions), the accounts also distinguish between the institutions that mediate these operations, be they governments, markets or families. This information allows one to study, among other things, the consequences of ageing on transfer systems, both familial as well as public; the interaction between these two systems, and the economic effects on different generations of changes in support systems. In addition, intergenerational transfers represent a substantial proportion of GDP and for that reason their composition, order of magnitude and direction can influence economic growth as well as the income distribution.
Over 30 countries from five continents are currently participating in the global NTA project. These countries differ in terms of their demography, their levels of development, their systems for supporting people in old age, their capacity to invest in human capital, and their populations’ capacity to save. A comparative analysis of these countries’ accounts not only sheds light on these differences, but it also helps to clarify the economic implications that population ageing has under different institutional arrangements.
ECLAC, through CELADE, is coordinating the regional National Transfer Accounts project for Latin America and the Caribbean, with financial support from the Canadian International Development Research Centre (IDRC)2 and the University of California, Berkeley. The first stage of the project recently concluded with participation by five countries (Brazil, Costa Rica, Mexico and Uruguay). The second stage has also begun, for which 4 new countries were included: Argentina, Colombia, Jamaica, and Peru.
The overall objective of the project is to improve the fiscal sustainability and equity of social protection systems in Latin America in the face of population ageing. There are four specific aims: (i) To strengthen the capacities of participant national centers to develop, implement, and use NTA method; (ii) To better inform social protection policy decisions by an analysis of the impact of population ageing on economic growth, fiscal sustainability, and equity; (iii) To better inform policymakers on the importance of long-run transformations brought about by population ageing; and (iv) To foster cross country comparison, collaborations, and regional perspectives. Based on these goals, CELADE has made ample use of new information on the generational economy in Latin America. Diverse studies have been undertaken in this area, many of them in collaboration with other organizations like the United Nations Population Fund, the Pan-American Health Organization and the World Bank.
A significant proportion of these studies were focused on the cases of Brazil, Costa Rica, Chile, Mexico and Uruguay, the countries participating in the first stage of the project. The case of Brazil has been an interesting one, not just because of it represents a large share of the Latin American economy and population, but also because of the rapid ageing process its population is undergoing and the presence of a fairly significant public transfer system. In fact, toward the end of the 1980s a reform was introduced in the country to expand the coverage of the pension system to poor and rural sectors, in addition to informal workers, and it currently covers a large proportion of the population. In Chile the analysis of NTA has allowed the fiscal and macroeconomic implications of social reforms to be examined, especially in the areas of pensions and health, sectors that have undergone structural reforms over recent decades.
The case of Costa Rica has been an interesting one because of its citizens’ high life expectancy, the relative stagnation of social investment in education and the importance of its public health programs. For its part, Mexico is characterised by an intense migratory movement that, in addition to Mexicans, includes a significant number of people from other countries in the region, essentially Central Americans, who seek to reach the United States. This makes the analysis of private transfers (remittance movements) and other types of intergenerational reallocations particularly interesting. With regard to Uruguay, it bears the distinctive characteristics of being the oldest country in the region and having a long-standing social protection system with significant levels of coverage, which like Chile’s has undergone various reforms over recent decades.
In October 2009 CELADE, together with the Population Division of the United Nations Department of Economic and Social Affairs and in the context of the National Transfer Accounts project, organised a meeting of experts in which certain government representatives, in particular from the five countries participating in the project, as well as those from different regional and international organisations, analyzed the consequences of population ageing on economic growth and the sustainability of Latin American transfer systems using information produced in the first phase of the project. This volume presents a report on this expert meeting accompanied by a selection of articles that were presented there, including work by professors Ronald Lee and Andrew Mason, as well as and the national teams in each of the countries participating in the project.
The production of the document was coordinated by Tim Miller, Population Affairs Officer, and Paulo Saad, Chief of the Population and Development Area at CELADE; the editing by Colin Mullins; layout by Fernanda Stang, and translation of Chapters VI, VII and VIII from Spanish by Lila Castillo.LC/W.439. November 2011
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Monday, January 16, 2012
Systemic oversight frameworks in LAC: current practices and reform agenda
The world financial crisis that started in the US housing market in 2008 brought into evidence deep failures of prudential oversight, linked for the most part to a failure to comprehend and handle systemic risk in a way that could prevent systemic crises. This paper summarizes the responses to the joint World Bank -ASBA survey o the state of systemic oversight in the Latin American and Caribbean financial sectors and reflects on some of the challenges identified by respondents. We found that there is broad consensus among regional financial authorities on the need to enhance the current systemic oversight framework. Improving consolidated supervision to mitigate risk-shifting in conglomerates, adjusting prudential regulations to account for the accumulation of systemic risks, redefining the role of the supervisor to make it more proactive, and improving coordination among local supervisors as well as with foreign supervisors figure preeminently in the regional reform agenda.
Systemic risk is defined as “a risk of disruption to financial services that is (i) caused by an impairment of all or parts of the financial system and (ii) has the potential to have serious negative consequences for the real economy”2. Systemically important financial institutions (SIFIs) are those impending failure, inability to operate or disorderly wind down could produce systemic effects as defined above. There are two dimensions to systemic risk; one relates to how risk is distributed in the financial system at a given point in time (“cross sectional dimension”) while the other relates to how risks evolve over time (“temporal dimension”)3. The current oversight framework focuses on individual institutions (microprudential framework) as opposed to the system as a whole (macroprudential framework).
A macroprudential approach to oversight has been proposed for some time with a view to manage systemic risk4 and is now being developed by standard setters. From a cross sectional dimension (also denominated micro-systemic risk perspective), regulation focuses on (i) removing incentives for the accumulation of risks in certain types of intermediaries, including through the extension of regulatory perimeters and the homogenization of regulations across different intermediaries to avoid regulatory arbitrage, (ii) adjusting prudential requirements to take into account the systemic risk induce by the institution, (iii) improving safety net mechanisms to reduce moral hazard pose by SIFIs that are deemed too-big-to fail5. From a temporal dimension, regulatory efforts aim at mitigating procyclicality by preventing the building up of risks in the cycle upturn and creating buffers to cushion the downturn to avoid a credit crunch. On the supervisory front, efforts are directed to monitor interconnections between participants and common risk factors. Such approach requires close coordination between financial sector supervisors and other financial sector authorities, especially monetary authorities.
The Latin America and Caribbean region (LAC), with the notable exceptions of some Caribbean countries affected by the failure of a complex insurance conglomerate, weathered the latest global financial crisis in part reflecting lessons learnt during past financial crisis as well as a somewhat different approach to oversight. Moreover, the credit cycle was not as pronounced as in the industrialized countries most affected by the crisis and public and private sector balance sheets were stronger than in past crisis episodes. However, as the region’s financial systems become more complex and more tightly integrated with those of the rest of the world, the question remains as to whether it could become exposed to similar failures caused by homebred endogenous dynamics or increased vulnerability to external turbulence.
In a framework of collaboration between the World Bank (WB) and the Association of Supervisors of Banks of the Americas (ASBA), the two institutions partnered to prepare a survey and identify the state of systemic oversight frameworks in the region. The survey also intends to understand the perception of the region on the possible need for a reform program aimed at better capturing and addressing systemic risk. This paper summarizes the responses to the survey and reflects on some of the challenges identified by respondents. The paper is organized as follows: section 2 provides a description of the survey; section 3 summarizes the main messages coming up from the survey; sections 4 to 9 provide a detailed description of the responses to the main sections of the survey; and section 10 provides some concluding thoughts.
World Bank. Author: Gutierrez, Eva; Caraballo, Patricia.Document Date: 2012/01/01.Document Type: Policy Research Working Paper.Report Number: WPS5941.
Wednesday, January 4, 2012
The Statistical Yearbook for Latin America and the Caribbean 2011
ECLAC The annual publication, one of the most important produced by this regional commission of the United Nations, includes an extensive collection of information in the region and is a reference for those who wish to access statistical data that are comparable between countries and over time.
For example, evidence can be drawn from the tables in the Yearbook on the marked decline which has been observed in fertility in Latin America. It also shows the growing unemployment among women compared to that of men.
There is also important data which can be used for understanding the regional economic situation, as well as the increasing proportion of raw goods being exported by the countries in the region, primarily due to the increase in prices over the past five years.
The Statistical Yearbook produced by ECLAC shows one of the key working areas of the Organization, which is processing, collecting, organizing and disseminating basic information on social, economic and environmental indicators and statistics in the countries of Latin America and the Caribbean, in addition to collecting and publishing methods and international recommendations on statistics.
The Statistical Yearbook 2011 is similar to previous editions in that it is divided into four chapters:
Demographic and social issues, such as population, employment, gender, education and health.
Economic statistics relating to prices, international trade, balance-of-payments and national accounts.
Information relating to the environment and natural resources, organized into areas including biota, water, forests, energy and environmental management, among others.
Methodological issues, such as the source of the data, their definition and coverage.
Most of the information comes directly from National Statistical Offices, Central Banks and other official organizations. For this reason, ECLAC invites the users to use the sources and technical notes which are available in this publication.
The chapter on environmental statistics also provides information from international and national sources. The advantages of international sources include greater geographical coverage, increased time series and better comparability.
More statistical information on Latin America and the Caribbean is available at the CEPALSTAT website, which contains a series of thematic databases which are updated periodically and cover a variety of issues (social, national accounts, the environment, gender affairs, productive activities, and external trade, among others).
  | Full text document Statistical yearbook, 2011 (PDF format 1.731 Kb.) |
| Contents, 2011 edition (PDF format 257 Kb.) |
| Introduction 2011 edition (PDF format, 66 Kb.) |
| 1. Social statistics (PDF format, 323 Kb.) |
| 2. Economic statistics (PDF format, 315 Kb.) |
| Technical notes, 2011 edition (PDF format, 506 Kb.) |
| Sources, 2011 edition (PDF format, 517 Kb.) |
| Documentos completo del Anuario estadístico, 2011 (Formato PDF, 1.731 Kb.) |
| Contenido versión 2011, (Formato PDF, 257 Kb.) |
| Introducción versión 2011, (PDF, 66 Kb.) |
| 1. Estadísticas sociales (Formato PDF, 323 Kb.) |
| 2. Estadísticas económicas(Formato PDF, 315 Kb.) |
| Notas técnicas, versión 2011 (Formato PDF, 506 Kb.) |
| Fuentes, versión 2011 (Formato PDF, 517 Kb.) |
LC/G.2513-P/B December 2012 222pp. ISBN: 978-92-1-221086-5 Sale Nº E/S.12.II.G.1x
Análisis estratégico sobre competitividad e innovación en los sectores de telecomunicaciones y turismo Oportunidades y desafíos en América Latina y el Caribe
En lo que respecta al conjunto de la economía mundial,la información de los organismos especializados muestra que, más allá de las actuales fluctuaciones de corto plazo provocadas por la crisis internacional, para los sectores de turismo y telecomunicaciones se registrarán tendencias positivas durante la presente década, que es el período en que se encuadra este análisis estratégico.
Según WTTC (2011), el turismo de origen internacional receptivo tuvo en 2010 una participación del orden del 9,1% del PIB mundial y ocupó a más de 250 millones de personas de manera directa o indirecta, en un ambiente extremadamente competitivo y cambiante a raíz de lo que se acaba de mencionar.
Por su parte, en OCDE (2007) se señala que en ese año las telecomunicaciones representaban el 3% del PIB de los países pertenecientes
a esa organización, mientras que en ITU (2010) se informa sobre la acelerada tendencia expansiva a mediano plazo en diversos servicios dentro del sector, particularmente en el campo de la telefonía móvil, seguida por el acceso a Internet.
En general, la existencia de un entorno favorable constituye una buena noticia para los negocios, y esto es aplicable a los actores de los sectores de turismo y telecomunicaciones en ALC.
Banco Interamericano de Desarrollo. DOCUMENTO DE DEBATE. Celso Garrido.División de Mercados de Capital e Instituciones Financieras del Sector de Capacidad Institucional y Finanzas. IDB-DP-204.Presentado en el V Foro de Competitividad de las Américas para el Banco Interamericano de Desarrollo y el Compete Caribbean Santo Domingo,Republica Dominicana, 5–7 de Octubre, 2011
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Tuesday, January 3, 2012
Educational upgrading and returns to skills in Latin America: evidence from a supply-demand framework, 1990-2010
It has been argued that a factor behind the decline in income inequality in Latin America in the 2000s was the educational upgrading of its labor force. Between 1990 and 2010, the proportion of the labor force in the region with at least secondary education increased from 40 to 60 percent. Concurrently, returns to secondary education completion fell throughout the past two decades, while the 2000s saw a reversal in the increase in the returns to tertiary education experienced in the 1990s.
This paper studies the evolution of wage differentials and the trends in the supply of workers by educational level for 16 Latin American countries between 1990 and 2000. The analysis estimates the relative contribution of supply and demand factors behind recent trends in skill premia for tertiary and secondary educated workers. Supply-side factors seem to have limited explanatory power relative to demand-side factors, and are only relevant to explain part of the fall in wage premia for high-school graduates.
Although there is significant heterogeneity in individual country experiences, on average the trend reversal in labor demand in the 2000s can be partially attributed to the recent boom in commodity prices that could favor the unskilled (non-tertiary educated) workforce, although employment patterns by sector suggest that other within-sector forces are also at play, such as technological diffusion or skill mismatches that may reduce the labor productivity of highly-educated workers.
World Bank. Author: Gasparini, Leonardo; Galiani, Sebastian ; Cruces, Guillermo; Acosta, Pablo. Document Date: 2011/12/01.Document Type: Policy Research. Working Paper.Report Number: WPS5921
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Innovating, Gaining Market Share and Fostering Social Inclusion Success Stories in the SME Development
Micro- and small and medium-sized enterprises (MSMEs) play a key role in the economy, accounting for more than 90% of the number of companies in the region. Depending on the area of the economy, their contribution varies widely —from significant in terms of employment, to far less so in production and very small in terms of exports. The fact that they contribute more to employment than to output is indicative of relatively low levels of productivity. Their limited contribution to exports shows their marked orientation toward the domestic market and their dependence on the dynamics of domestic demand. Their output is therefore determined to a large extent by employment and wage levels in the economy as a whole.
Within the industrial structure, small and medium-size enterprises (SMEs) account for a relatively larger proportion of production and sales in the larger countries of the region because the indivisibility of some productive activities increases the minimum efficient plant size. In smaller economies, then, large enterprises usually produce a significant proportion of the consumer goods that carry the most weight in the industrial structure.
The countries can be divided into three groups, based on the relationship between the size of their economies and the sectors in which most SMEs operate. In the larger countries with the most highly developed industrial structure (Argentina, Brazil and Mexico), SMEs are concentrated in the food, textile and garment-making, chemicals and plastics and metallurgical industries. In medium-sized economies (Bolivarian Republic of Venezuela, Chile, Colombia, Ecuador and Peru) SMEs operate principally in the food and chemical industries. Unlike the first group, they have only a scant presence in the metallurgical sector. In the smaller countries (Costa Rica, Nicaragua and Uruguay), SMEs tend to be clustered in the food industry.
The large proportion of SMEs operating in the food industry reflects their tendency to specialize in labour-intensive sectors with natural competitive advantages and small economies of scale. Because these activities are chiefly oriented toward domestic markets, direct exports are small.
Adding microenterprises as a policy focus has expanded the universe of small players and made it more complex and diverse, encompassing both subsistence microenterprises and dynamic medium-sized enterprises that sometimes venture into the export markets. This diversity can be seen in the low relative productivity of smaller enterprises compared with large ones. While microenterprise productivity in the countries of Latin America is barely 3% of the level posted by larger enterprises, in advanced countries such as France smaller enterprises are 70% as productive as large companies (ECLAC, 2010, table III.7).
The productive environment in which SMEs operate has also been made more complex as economies have become more open and international competition has increased, alongside high prices for primary goods and heavy demand for imported products. In 2002-2008 the region’s exports rose at an annual rate of 1.5%, while the annual rise in imports was 15.5%, outpacing the rate for any other region and exceeding GDP growth as well. These shifts in trade flows are closely linked to trade liberalization which has advanced with the signing of free trade agreements and the deepening of subregional
trade integration schemes.
Such diverseness has made it very difficult to fashion relatively homogenous policies and apply them to such a varied group of agents. There is therefore a need for programmes, instruments and intervention modalities that take these differences into account.
This document was prepared by officers of the Division of Production, Productivity and Management, the Economic Development Division, the Social Development Division and the Special Studies Unit of the Economic Commission for Latin America and the Caribbean (ECLAC) and the ECLAC office in Washington, D.C.; staff members of the Department of Economic Development, Trade and Tourism, the Department of Sustainable Development, the Department of Social Development and the Trust for the Americas of the Organization of American States (OAS); and officers of the Integration and Trade Sector, the Inter-American Investment Corporation, the Multilateral Investment Fund and the Science and Technology Division, the Financial Markets Division, and the Meso-America Project of the Inter-American Development Bank (IDB). Work on the document was coordinated by the Division of Production, Productivity and Management of ECLAC with assistance from the ECLAC office in Washington, D.C.
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Preliminary Overview of the Economies of Latin America and the Caribbean 2011
ECLAC projects growth of 4.3% for the Latin American and Caribbean economy in 2011, lower than the rate in 2010 when the region was rebounding from the impacts of the economic and financial crisis of 2008-2009. The forecast growth rate for 2011, which represents a 3.2% rise in per capita GDP, reflects two main factors: the slacking of global economic growth and the cooling of domestic demand in Brazil, the region’s largest economy, prompted by the government’s measures to keep the economy from overheating after its growth surge in 2010.
During the first part of the year, however, external conditions remained benign for the region, with strong demand for its exports, improvements in the terms of trade and advantageous access to external financing. Several countries posted a more robust performance than in 2010, including oil exporters which gained from high international prices and several Central American and Caribbean countries which benefited from increased exports to the United States and remittances from emigrant workers. GDP growth was 4.6% in South America slightly above the 4.1% rate for Central America, while expansion of only 0.7% for the Caribbean is due to a contraction in Trinidad and Tobago, the subregion’s largest economy.
In the first half of the year, macroeconomic policy faced a number of challenges stemming partly from developments in international markets. The countries tackled these in different ways, depending on their structural characteristics, the severity of the respective impacts, the instruments available to them and their policy priorities. First of all, the positive outlook for the region’s economy and the interest rate spreads with respect to global financial markets —widened, in some cases, by the monetary policies deployed to contain the inflationary impact of rising international prices, especially for foods and fuels— spurred capital inflows which contributed to real currency appreciation in the region. In this context, a number of countries also withdrew the fiscal stimulus, seeking at the same time to regain the fiscal space consumed by the measures implemented to soften the impacts of the 2008-2009 crisis. Even so, the central government overall balance rose by 0.4 percentage points on average, mainly owing to higher fiscal revenues. As the year advanced, however, and the global and regional economic slowdown began to take hold, the focus of economic policy turned increasingly to maintaining an acceptable rate of growth, especially as the euro zone situation and outlook deteriorated.
At the regional level, growth in all demand components was down for the year overall, after the brisk recovery in 2010 from the lows during the global financial crisis. Household consumption continued to grow at rates above output, however, thanks to rising real wages and to strong job creation which brought the regional unemployment rate down from 7.3% in 2010 to 6.8% in 2011. Credit also continued to expand rapidly. Readily available credit at rates of interests which in many countries actually fell in real terms also contributed to a fresh rise in gross fixed capital formation, which took the investment ratio to a new record for recent decades, although it is still not high enough to sustain the growth rates required to satisfy the many economic and social needs of the region. Imports surged in response to buoyant domestic demand, while exports climbed mainly because of higher prices, while volumes increased less. In this context, the deficit on the balance-of-payments current account widened slightly to 1.4% of GDP, and was more than offset by voluminous inflows of foreign direct investment and, to a lesser extent, portfolio investment, which enabled fresh rises in international monetary reserves.
Driven mainly by high international prices for foods and fuels, the inflation rate rose in the first part of 2011, but began to ease later and ended the year at a rate of around 7%, only slightly higher than end-2010.
The slowdown in regional growth steepened in the second half of the year, reflecting slackening export growth, falling prices for the region’s main export commodities —which nonetheless remained at historically high levels— and cooling domestic demand. Particularly in the fourth quarter, regional growth expectations took a more negative turn as uncertainty mounted over the future of the global economy, especially in view of doubts over whether a sustainable solution will be found to the debt crisis in several euro zone countries, and the resulting volatility in international markets.
This is the scenario underlying 2012 economic growth projections for Latin America and the Caribbean. With global economic growth remaining sluggish, the regional slowdown is likely to continue, with a fresh, albeit moderate fall in the growth rate to 3.7%. A bleaker scenario cannot be ruled out, however, if the euro zone crisis deepens. This would take a toll on global markets and would certainly hurt the region’s growth prospects by impacting on both the real economy and the financial markets. Amid such great uncertainty and facing the possibility of sharp changes in the external environment, the Latin American and Caribbean countries should prepare the best possible measures in light of their national situations to protect and strengthen the bases of their economic and social development. Standing them in good stead are voluminous international monetary reserves and —with the exception of some Caribbean countries— low levels of public and external debt. On the other hand, less leeway is now available for some of the countercyclical instruments deployed during the 2008-2009 crisis and some of the external factors which contributed to the rapid recovery of the global economy at that time, especially the developed countries’ fiscal and monetary coordination, are now weaker.
CEPAL. División de Desarrollo EconómicoNaciones Unidas, 2000-2011 Diciembre 2011 124 pp
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