Latin America Keeps Expanding, But It Needs to Do Better

Latin America posted solid economic growth in 2005 for the third straight year, but its economies lagged behind other nations struggling with poverty, a UN agency reported yesterday.

Regional economic growth was 4.3 percent in 2005 and is expected to be 4.1 percent next year, aided by favorable international conditions and strong internal demand, according to the Santiago-based Economic Commission for Latin American and the Caribbean, CEPAL.

Unemployment decreased from 10.3 percent to 9.3 percent in 2005 and poverty from 44 percent in 2004 to 40.6 percent, and growth is expected to continue at a similar rate through 2006, the commission said in an annual report.

Venezuela reported 9 percent growth, Argentina had 8.6 percent and the Dominican Republic had 7 percent.

The economies of Uruguay, Chile, Panama and Peru all grew by about 6 percent. The lowest country growth rates were in Haiti with 1.5 percent, Brazil and El Salvador with 2.5 percent, and Paraguay and Mexico with 3 percent.

CEPAL also points out that one of the characteristics of this surge period is the growing surplus of the balance of payments current account, an extraordinary fact not seen in the region´s half century economic history.

World expansion plus the growing participation of countries such as China, India and other Asian economies have helped improve trade exchange terms for South America (31 percent increase between the 1990s and 2005) and to a lesser extent for Mexico, 22 percent.

Finally the report indicated that many governments are taking advantage of the current situation to improve the fiscal situation. With expanding budget income, surpluses are being used to reduce public debt, which is considered “very positive.”