ECLAC mid year report on Latin America –14 june 2012

In the " Macroeconomic Report on Latin America and the Caribbean" issued on 14 June, ECLAC ( Economic Commission for Latin America and the Caribbean) maintains its 3.7% growth forecast for the region, following a growth rate of 4.3% in 2011. While making this projection, the report has taken into account the euro zone risk factors, a slowing Chinese economy, precarious growth in the United States and the potential for oil price increase due to geopolitical conflict.  

Other highlights of the report:

The main driver of growth was domestic demand, not external demand. Private consumption remained buoyant on the strength of rising employment and real wages, continuing expansion of lending to the private sector 

In 2012, the fastest growing economies will be Panama (8.0%) and Haiti (6.0%), followed by Peru (5,7%), Bolivia (5.2%) and Costa Rica (5.0%), Venezuela (5.0%), Chile 4.9%, Mexico 4.0%, Argentina 3.5% and Brazil 2.7%   

With domestic growth outpacing external growth and a general worsening of the terms of trade, imports of Latin America are expected to climb by 10.2% during the year, outstripping a 6.3% rise in exports. As a result, the trade surplus would go from 1.3% of GDP in 2011 to just 0.7% of GDP in 2012. The current-account deficit will be 1.7% of GDP as against 1.2% in 2011.  

Unemployment in the region will touch a record low of 6.5% in 2012. Employment continued to rise in 2012, the quality of employment improved, real wages grew and, as a result, consumption and domestic demand jumped. In sum, the positive labour trends of 2010 and 2011 remained in place.

Inflation maintained its downward trend and in April 2012 stood at an annual rate of 5.5%, compared with 6.7% in March and 7% in December 2011. Venezuela and Argentina are the only exeptions with double digit inflation of over 20%

In case the global economic scenario worsens beyond the current expectations, the Latin American countries have an array of policy instruments at their disposal to address such a scenario and the fiscal room for manoeuvre to implement a countercyclical policy that would contain the immediate effects of the crisis on their economies.

This report reconfirms my optimism and confidence about the resilience and strength of the New Latin America