UN Eclac: Latin America Was Better Equipped To Face Crisis
By Carolina Pica, Of DOW JONES NEWSWIRES
SANTIAGO -(Dow Jones)- Unlike in previous crises, such as the Asian financial
crisis in the late 1990s or the Mexican crisis in the mid-1990s, Latin America
was in a much stronger position to weather the current financial crisis, the
head of the U.N.'s Economic Commission for Latin America and the Caribbean said.
The global financial crisis has hit resource-rich Latin America quite hard,
driving down demand for and prices of the commodities it exports.
The region's gross domestic product will likely contract between 1.8% and 1.5%
on the year in 2009, but it will quickly recover next year, Alicia Barcena, who
heads the commission known as Eclac, said in an interview.
"We're even seeing positive growth in some countries this quarter," Barcena
said after presenting Eclac's Social Panorama of Latin America 2009.
The economic rebound is in part due to most of the countries in the region
having a solid fiscal situation, lower public debt than in previous decades,
significant foreign reserves and controlled inflation before the crisis hit.
Total international reserves of over $500 billion in 2008 gave the region the
fiscal room to maneuver through the crisis, according to Barcena.
The financial crisis "found the region on much stronger ground than previous
crisis and as a whole and it was able to apply countercyclical fiscal and
monetary policies," she said, noting that this sharply contrasted how Latin
America fared through crises in previous decades.
In almost all of the countries in the region, governments implemented some
sort of stimulus program--most of which included direct transfers to lower
income families or individuals.
She said these direct transfers were especially important in substituting lost
income in countries such as Mexico and Honduras, which are highly dependent on
remittances from the U.S.
But Latin America hasn't escaped the crisis unscathed. As a result of the
economic slowdown, poverty in the region will increase by 1.1% this year, while
indigence will grow by 0.8%, when compared with 2008. This means there will be 9
million more people in poverty and an additional 5 million more indigents.
The UN commission called on Latin American governments to not cut back on
social spending next year as fiscal stimulus programs unwind.
Barcena said it's also key for governments to take up longer-term strategic
measures that will move the private sector to fuel growth and employment.
"Governments must have active policies aimed at the smaller and medium-sized
firms to stimulate productivity," Barcena said.
In addition, for the economic recovery to take hold, more women must be
incorporated into the work force, she said. With improved access to daycare and
lower birth rates, more women in Latin America are joining the labor force.
"There are still pending issues, such as equal pay and working conditions, but
... the increasing integration for women in the workforce is key to the economic
recovery," the head of the commission said.
-By Carolina Pica, Dow Jones Newswires; 56-2-820-4244; carolina.pica@
dowjones.com
(END) Dow Jones Newswires
11-19-091525ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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