Latin America Diminishing Share of World GDP

Debt, inflation and Asia´s strong economic growth forced Latin America´s share of the world´s GDP to drop 1.8 points in the last quarter of a century, according to international consultants based on IMF/World Bank reports.

Latin America´s contribution which represented 7.2 percent of GDP in 1980 dropped to 5.4 percent equivalent to 2.5 trillion dollars.

United States with 4.6 percent of world population (compared to Latin America´s 8 percent) has a 28 percent share of world GDP.

Big changes also happened inside Latin America in the last 25 years. Argentina which concentrated 27 percent of the region´s GDP in 1980, dropped to third place behind Brazil and Mexico and in 2005 represents a modest 7.8 percent.

Chile on the other hand managed to climb 0.7 points from 3.6 percent of Latin America´s GDP in 1980 to 4.3 percent in 2005. Chile´s success in spite of its relatively small economy is based on sound economics, fiscal discipline, low inflation and pioneering trade relations with Asia which spurred strong, sustained expansion.

Brazil leads in the region with a GDP share ranking between 35 percent and 37 percent, and Mexico boomed ahead particularly with oil and the 1994 North American Free Trade Agreement encompassing United States and Mexico.

However Latin America´s high foreign debt, $763 billion dollars in 2004 is one of the factors that help to explain the region´s lesser participation worldwide.