Monday, June 18, 2012

Latin America To See Slower Growth in 2012: ECLAC

A new report by United Nations’ Economic Commission for Latin America and the Caribbean (ECLAC) predicts that the financial crisis in Europe and sluggish economies in China and the United States will take a toll on economic growth in the hemisphere this year.  According to ECLAC’s “Macroeconomic Report on Latin America and the Caribbean” (.pdf), the region is expected to grow by only 3.7% in 2012, compared to 4.3% the year before.  

The ECLAC report suggests that growth will be highest in Panama (8.0%) and Haiti (6.0%), followed by Peru (5.7%), Bolivia (5.2%), Costa Rica (5.0%), Venezuela (5.0%) and Nicaragua (5.0%). Mexico and Chile are expected to see moderate expansion this year (4.0% and 4.9%, respectively), while Argentina (3.5%) and Brazil (2.7%) have seen major drops in growth compared to the previous year.

Taken by itself, the economic forecast for the Caribbean is far worse off than the region overall, with ECLAC expecting Caribbean economies to grow by only 1.9.

The UN organization cautions that growth could be further affected in the region if the global financial crisis deteriorates, it could stop financial inflows to the region and cut off foreign lines of credit. This would have a dramatic impact on regional stock markets, investment, and trade.

For the moment, however, the region is experiencing record growth in investment, as detailed in another recent ECLAC report entitled “Foreign Direct Investment in Latin America and the Caribbean.” (.pdf)  The report finds that foreign direct investment grew by 31 percent last year, which as Shannon O’Neil points out over at Latin America’s Moment, is “the most of any region and three times Asia’s growth rate.”

News Briefs

  • The G-20 leaders’ summit begins today in Los Cabos, Mexico. AFP reports that the Group of Twenty’s leaders were comforted on Sunday after a pro-bailout party narrowly won  elections in Greece, and are hopeful that member nations will step up contributions to the International Monetary Fund.
  • Meanwhile the New York Times points to the summit as a sign of economic progress in Mexico, which comes in the wake of slow growth in Brazil. As chair of the summit, President Felipe Calderon hopes to distract attention from the country’s drug war and focus it on his country’s low inflation, moderate growth and overall macroeconomic stability.
  • The Washington Post examines the potential order of succession in Venezuela, should President Hugo Chavez prove too ill to rule or campaign in the upcoming October elections. While Chavez has several committed allies who would likely pursue his Bolivarian Revolution with fervor in his absence, none of them are terribly popular among Venezuelan voters, and would likely lose to the opposition.
  • Nicaraguan authorities have arrested Colombian national Luis Felipe Rios Castaño, who they claim acted as a spy for the Colombian military. The arrest comes during a particularly tense moment between the two countries, as they are awaiting an International Court of justice ruling over Nicaragua’s claims to Colombia's San Andres, Providencia and Santa Catalina archipelago. Colombian President Juan Manuel Santos said he would launch a full investigation into the incident. 
  • Officials in Paraguay have arrested nine landless farmers after six police officers were killed in clashes in the east of the country. The BBC reports that the police were attempting to evict the some 100 farmers from land they had claimed last month. Locals claim that 11 civilians were killed in the clashes, but officials have not confirmed this.
  • US government data for fiscal year 2012 suggests that the number of Cubans trying to reach the US has increased compared to the prior fiscal year, according to the Miami Herald. From October 11, 2011 to last week, some 8,200 undocumented Cubans had been intercepted at sea or arrived at border checkpoints.
  • El Nuevo Herald profiles the truce between rival street gangs in El Salvador that has contributed to a massive reduction in violence,  and has now lasted for 100 days. El Salvador’s ContraPunto has an interesting interview with an MS-13 member known as “Baby,” who says that most gang members have a real interest in building a better life for themselves and their families.
  • While President Barack Obama’s recently issued stay on deportations saw widespread praise, he has also been criticized for not announcing the move sooner. The AP reports on this criticism, and on frustration among recently-deported youths.