Due to the sluggish performance of the world economy and uncertainty and volatility of financial markets, Latin America and the Caribbean will drop to 3.7% in 2012, compared to 4.3% in 2011 according to a Report from UN Economic Commission for Latin America and the Caribbean (ECLAC). Although growth had already slowed down from 5.9 per cent in 2010, the Report states that most of the region showed “a positive performance thanks to a favorable external situation.” However, an increase in volatility and uncertainty during the second half of the year significantly complicated the global economic environment. The Reports identifies the Euro-crisis as a key factor that could contribute to economic uncertainty in the region. This Report also reflects a slightly more pessimistic perspective than just a couple of months earlier anticipated by the IMF when the global slowdown was already on the horizon. Read: - “Latin America/Caribbean Economic Outlook IMF” - diplomaticallyincorrect.org/films/blog_post/latin-americacaribbean-economic-outlook-imf-october-2011-by-ambassador-mo/36053 Effect of Eurozone Crisis: “There is a great possibility of a deep crisis in the Eurozone, which would significantly affect the global economy overall and would impact our region primarily through the real channel – exports, prices, foreign investment, remittances and tourism – and the financial channel, greater volatility, possible capital outflows and difficulties in accessing credit,” according to Alicia Bárcena, Executive Secretary of ECLAC. The report also stresses that future growth will be intricately tied to the economic performance of developed countries, and a drop in their level of activities would result in a fall in demand for goods, negatively affecting regional exports and the prices of principal export products. Read: -“From China to Eurozone-Economic Slowdown” - diplomaticallyincorrect.org/films/blog_post/from-china-to-eurozone-economic-slowdown-by-ambassador-mo/42025 Region Relatively Well Situated on Fiscal Policy & Budgets to Confront Slowdown, But… The region’s high level of reserves and low levels of public debt – except for a few Caribbean countries – are strengths that would enable it to better face the economic downturn next year, says the report. The reserves would allow countries to finance a deficit in the current account, and the relatively low debt would make room for countercyclical fiscal policies, allowing an expansionary monetary policy. However, not all countries face the same economic or political circumstances. In many States, there are fewer arenas for anti-crisis policies than before the crisis three years ago, and measures would not be as powerful as they were then, according to the report. However, Latin America’s/Caribbean relative wealth gap and social inequality could also dramatically impact population segments/classes differently. Read: - diplomaticallyincorrect.org/films/blog_post/latin-americacaribbean-remains-most-socially-unequal-region-un-by-ambassador-mo/27809. Nonetheless, Latin America has witnessed a significant reduction in poverty during the last decade in general. Read: - “Poverty Drops in Latin America” - diplomaticallyincorrect.org/films/blog_post/poverty-drops-in-latin-america-by-ambassador-mo/42220 Growth also varies within the region with South American countries showing the most growth this year at 4.6 per cent, followed by Central America with 4.1 per cent. However, the Caribbean nations grew only 0.7 per cent. ECLAC underscored that some of the principal challenges for Latin American and Caribbean economic policy include preparing for an eventual deterioration of the international situation as a whole, taking into account the possibility of sudden changes and the delay in the impact of macroeconomic policies, designing a fiscal policy package and ensuring it is financed for easy implementation, and protecting jobs and the most vulnerable social sectors. ECLAC has been alert to this risk in its analysis over at least the last couple of months. Read the above links: Link to Report - www.eclac.cl/cgi-bin/getProd.asp?xml=/publicaciones/xml/2/45452/P45452.xml&xsl=/de/tpl-i/p9f.xsl&base=/de/tpl/top-bottom.xsl By Ambassador Muhamed Sacirbey Facebook – Become a Fan at “Diplomatically Incorrect”

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