SANTIAGO, Chile – Latin America has shown economic resilience in the face of a global financial crisis, with growth projected at 3.2 percent in 2012. Thanks to predicted economic recovery in 2013 by Argentina and Brazil, the region’s growth is forecast at 3.8 percent next year, the Economic Commission for Latin America and the Caribbean (ECLAC) reported this week.
However, a slowdown in the Chinese economy (from 9.2 percent growth in 2011 to 7.7 percent in 2012), financial troubles in the Eurozone and only modest growth by the U.S. economy affected exports from the region, which dropped from 22.3 percent growth in 2011 to only 1.6 percent this year.
Troubling signs in 2012 include an economic slowdown in Brazil (from 2.7 percent growth in 2011 to 1.2 percent in 2012) and Argentina (8.9 percent in 2011, compared to 2.2 percent this year). Together, the two countries account for 41.5 percent of Latin America’s gross domestic product, according to ECLAC’s report, presented on Tuesday.
ECLAC forecast the region’s growth at 3.2 percent in 2012 and 4 percent through October 2013. Unemployment has dropped in the region, from 6.7 percent last year to 6.4 percent this year, and average salaries have increased, a key factor in the uptick in growth figures this year.
“The region has shown some resilience,” ECLAC Executive Secretary Alicia Bárcena said, noting that Latin America’s growth is above the global average of 2.2 percent in 2012.
Panama registered the highest percentage of growth in the region, at an estimated 10.5 percent, followed by Peru (6.2 percent), Chile (5.5 percent), Venezuela (5.3 percent), Bolivia (5 percent), Costa Rica (5 percent), Colombia (4.5 percent), Nicaragua (4 percent) and Uruguay (3.8 percent).
The countries with the lowest economic growth rates are Paraguay (1.8 percent), San Kitts and Nevis (-0.8 percent) and Jamaica (-0.2 percent).
For 2013, ECLAC predicts growth of 3.8 percent, driven by better performances expected in Argentina and Brazil, where better harvests and more investment is likely.
Increased investment in Chile, Peru, Uruguay and Bolivia, mostly in construction and trade, also affected growth in 2012, and are expected to contribute in 2013.
By sub-region, South American economic growth is forecast at 4.1 percent in 2013, while Central America is projected at 3.8 percent, and the Caribbean at 2 percent.
Paraguay was affected by a bad soybean harvest this year, but is expected to recover by up to 8.5 percent in 2013.
Argentina’s 2013 growth is projected at 3.9 percent, while Brazil is forecast to achieve 4 percent.
However, these growth projections will depend on the evolution of the global economy next year. Despite uncertainty, Latin American economies are expected to have dynamic internal demand, better employment indicators and growth in the private banking sector.