Latin America caught in worst contraction over the last two decades

Latin America and Caribbean economies will put on the worst shrinking numbers of the last twenty years with a 1.1 percent overall plunge, according to a World Bank report issued yesterday in Washington.

The financial crisis in Argentina –the worst of all time in the country- and its ripple effects on neighboring nations like Uruguay and Paraguay, put growth on hold and pushed foreign investment down in the region for a fifth year in a row.

The World Bank says the domestic situation in Venezuela and Brazil’s presidential elections also fanned the flames of distrust among investors.

The report goes on to state that Latin America was the world’s worst region in 2002 and the only one scoring a yearend shrinkage.

In addition to outlandish jitters, low-priced raw materials took a toll of their own, too. A plummeting coffee price, for instance, wreaked havoc with Central American producers.

As far as global trends are concerned, the WB report says “the world recovery could soon let off some steam and there’s widespread fear that the planet might as well lean to a new recession.”

According to estimates put out by the World Bank, the global economy will grow 1.7 percent this year and will step up to 2.5 percent in 2003.

The storming factors looming over the global economy range from low confidence among consumers and bleak stock markets to Latin America’s foreign debt and Japan’s banking system, let alone the threat of a possible war between the United States and Iraq.