Washington -- The
International Monetary Fund (IMF) projects a continuing
positive economic outlook for Latin America and the Caribbean.
Anoop Singh, director of the IMF's Western
Hemisphere department, said at an October 13 symposium in
Bogotá, Colombia, that the region is projected to
have a 4 percent economic growth rate in 2005 and a 3.75
growth rate in 2006, which he said are "well above
historical averages." (See related
Singh added, however, that growth is moderating
in the region after reaching a 24-year high in 2004 of 5.5
The continued economic expansion in Latin
America and the Caribbean "appears more resilient"
than in previous upturns in the region, said Singh. He added
that many countries in the area have "seized the opportunity"
to reduce public debt by "implementing significant
structural adjustments in their fiscal positions."
Mexico and countries in South America have
gained, in particular, from a surge in the prices of fuel,
food and metals around the world, Singh said. But the countries
of Central America and the Caribbean have faced a more difficult
growth challenge, in part because of pressures exerted by
their higher oil import bills, he said.
Although the short-term economic outlook
for Latin America and the Caribbean is generally positive,
Singh pointed to "considerable differentiation"
between countries in the region depending on individual
economic and political circumstances. Global events could
also affect regional economic expansion, he said, such as
the possibility of a "sharper-than-expected slowdown
of growth in key trading partners or international trade,
possibly triggered by a continued surge in oil prices and/or
rising protectionist sentiment."
Latin America and the Caribbean also remain
vulnerable to an abrupt tightening of global financial-market
conditions, said Singh.
The IMF official said that, despite the
strong increase in world oil prices, inflation in the region
is expected to drop from 6.5 percent in 2005 to 5.5 percent
in 2006. This projected decline partly reflects the region's
"prudent stance of monetary policies," he said.
He cited Colombia as a case in point: inflation in that
country declined from 6.5 percent during 2003 to 5 percent
in September 2005 -- the lowest level in decades.
China accounted for 7 percent of the increase
in Latin American and Caribbean exports over the past two
years, added Singh. He said this "modest figure"
masks the importance of China for some key Latin American
exports, such as copper and soybeans. Singh explained that
China's robust economic growth has spurred higher prices
for these products and benefited exporters in such South
American nations as Argentina, Brazil, Chile and Peru.
China's "thirst" for natural resources
has also boosted oil prices -- benefiting net oil exporters
such as Colombia, Ecuador, Mexico, Venezuela, and Trinidad
and Tobago -- and has the potential to increase China's
investments in Latin America, he observed.
Global economic growth is projected to remain
at 4.25 percent in 2005 and 2006, said Singh. This reflects,
in part, the resilience of the U.S. economy in the face
of recent hurricanes and high oil prices, he said.
U.S. Commerce Secretary Carlos Gutierrez
said September 20 that in view of heightened global competition,
the nations of the Western Hemisphere must aggressively
pursue opportunities for growth. Speaking before the U.S.
Chamber of Commerce, Gutierrez urged hemispheric governments
to help establish the proposed Free Trade Area of the Americas,
which would eliminate trade barriers throughout the region.
(See related article.)
Gutierrez also praised the U.S.-Central
America-Dominican Republic Free Trade Agreement (known as
CAFTA-DR) as "an enormous step forward in the process"
of greater regional integration. For more information about
CAFTA-DR, see Central
America Free Trade Agreement-Dominican Republic.
For additional information, see the October
Context and Regional Outlook for Latin America and the Caribbean
(PDF, 48 pages), available on the IMF Web site.