The U.N. agency for Latin America is predicting 3.2 percent economic growth here in 2011. It’s estimate for 2012 is 3.5 percent.
That’s good news because many countries posted negative growth in 2009.
Those estimates are slightly lower than the 4.7 percent projected growth for all of Latin America in 2011 and the 4.1 percent estimate for 2012. The estimates for Costa Rica are lower than all the Central American states except El Salvador. Panamá is estimated to have an 8.5 percent growth this year and 6.0 percent the next.
Latin America and the Caribbean will maintain the recovery that began in the second half of 2009 following the international economic crisis, and will grow by 4.7 percent thanks to the boost of internal demand, according to the agency, the Economic Commission for Latin America and the Caribbean.
The data is included in the “Economic Survey of Latin America and the Caribbean 2010-2011,” which was released Wednesday.
In 2011, regional growth is mainly being driven by private consumption, which is attributable to improved labor indicators and increased credit, said the report.
According to the report, growth will also have a positive
impact on the region’s labor market, which means that the unemployment rate may fall from 7.3 percent in 2010 to between 6.7 and 7 percent in 2011.
In terms of countries, the fastest growing this year will be Panama (8.5 percent), followed by Argentina (8.3 percent), Haiti (8.0 percent) and Peru (7.1 percent). At the same time, Brazil and Mexico will grow by 4 percent, the Bolivarian Republic of Venezuela by 4.5 percent and Colombia by 5.3 percent, the report estimated.
The report say that rising international food and fuel prices, in a context of higher internal demand, have given rise to inflationary pressures. As a result, several of the region’s countries have toughened their monetary policy, which has increased the difference between internal and international interest rates. In a context characterized by extremely high external liquidity, this may lead to exchange rate appreciation in the region.
According to the report, the region’s economic authorities should implement measures to contain currency appreciation by combining foreign exchange market interventions, checks on capital inflows and financial regulations. Such measures would be boosted by an accompanying fiscal policy aimed at increasing public sector savings.
Lastly, the report points out the uncertainties in the international economy, particularly in the United States, Europe and Japan, and the possibility of a worsening international climate limiting the region’s growth potential.