There used to be a saying " when USA catches cold, Latin America sneezes". The region had been susceptible to external shocks and had suffered in the past. The last time the economies of the region went into a tailspin were following the Asian and Russian crises. With the subprime crisis and the looming recession in USA, the latino economies should have normally gone into crisis situations. But they have withstood the external crisis thanks to the new paradigm of economic stability and growth. The economies have become resilient with stronger macroeconomic fundamentals. The policymakers have learnt their lessons and are now more careful, clever and disciplined. Of course, Lady Luck has rewarded the latin americans for their good behaviour with high demand and price for their primary commodity exports.
According to a report ( 23 April) of the Economic Commission for Latin America and the Caribbean (ECLAC), Latin America and the Caribbean will grow an average of 4.7% in 2008, 0.2% lower than the 4.9% estimate issued by them in December 2007.
ECLAC projects that the countries with the highest growth rates this year will be Panama (8%) and Argentina, Cuba and Peru (7%). Mexico and Ecuador will have the lowest growth, with 2.7% and 3%, respectively.
The countries with growth rates nearing the regional average will be Bolivia and Paraguay (5%), Brazil (4.8%), and Chile, Costa Rica, Guatemala and Honduras (4.5%).
South America is projected to grow by 5.7% while mexico and central america is expected to grow by 3.1%.
Last year, average Gross Domestic Product growth in Latin America and the Caribbean reached 5.7%.
The region is into its sixth consecutive year of growth in 2008, with annual growth of over 4% since 2003. Besides growth, the other fundamentals are also healthy. Inflation is in single digit, exchange rates are stable and predictable, external debt manageable and industry, business, agriculture and consumption are showing significant growth.