Challenges of Latin America and the Caribbean in front of the current development crossroads ANTONIO PRADO DEPUTY EXECUTIVE SECRETARY Regional Meeting of the Ambassadors of Norway in Latin America Santiago, 20 January 2016
Latin America and the Caribbean is at a crossroads Challenges of Latin America and the Caribbean in front of the development crossroads Antonio Prado
After a period of prosperity, the region is facing a more difficult external context and slower economic growth • The world economy has not expanded as expected. Growth projections for 2016 (2.9%) are slightly better than those for 2015 (2.4%). • Upturn in growth in the United States (about 2.6% in 2016) with positive impacts for remittances, tourism and trade in Mexico, Central America and the Caribbean. • Fiscal imbalances and lack of competitiveness in the eurozone , plus high unemployment and slow growth of 2.0% in 2016 are acting as a drag on global trade. • Slowdown in China from a growth of 9.2% in 2011 to a lesser growth of 6.5% in 2016 is having an impact on countries that export natural resources. • End of quantitative easing (QE) in the United States and launch of QE in Europe likely to create more volatile financial conditions. Challenges of Latin America and the Caribbean in front of the development crossroads Antonio Prado
The economic and trade slowdown indicates a future with lower growth LATIN AMERICA AND THE CARIBBEAN: ANNUAL VARIATION IN LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2016 a MERCHANDISE EXPORTS, 2000-2015 a ( Percentages, on the basis of dollars at constant 2010 prices ) (Percentages) 6,2 Panama 5,2 Dominican Republic 30 4,5 Bolivia (Plur. State of) 4,3 Central America 4,3 Nicaragua 20 4,2 Cuba 4,0 Guatemala 3,4 Peru 10 3,3 Costa Rica 3,3 1.0 Honduras 3,0 0 Colombia 3,0 Paraguay 2,6 Mexico -15.0 -10 2,5 Haiti 2,4 El Salvador 2,1 Chile -14.0 -20 1,6 The Caribbean 1,5 Uruguay 0,8 Argentina -30 0,3 Ecuador 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0,2 Latin America and the Caribbean -0,8 South America -2,0 Brazil -7,0 Venezuela (Bol. Rep. of) Volume Price Value -10 -5 0 5 10 Source : ECLAC, based on official figures from the countries’ central banks, customs offices and national institutes of statistics. a Figures for 2015 and 2016 are projections. Challenges of Latin America and the Caribbean in front of the development crossroads Antonio Prado
Global tectonic shifts • Reorganization of the global economy and international politics in trade blocs : TPP, TTIP, RCEP, BRICS • Decoupling of the financial economy from the real economy • Technology revolution without precedent • Tendency towards global inequality • An uneven demographic transition : some countries have a demographic dividend, others have an ageing population • Large-scale migration as a result of disasters, wars and inequality • Urbanization: 80% of the population lives in cities • Growing ecological footprint • Vulnerability to climate change and to natural disasters (cumulative cost of US$ 350 billion) • Conflicts, violence and insecurity Challenges of Latin America and the Caribbean in front of the development crossroads Antonio Prado
Not enough was done to increase investment in human capacities, and to reduce inequality AMÉRICA LATINA: POBLACIÓN 20-24 AÑOS QUE CONCLUYÓ AMÉRICA LATINA (PROMEDIO SIMPLE 18 PAÍSES): CONCLUSIÓN LA EDUCACIÓN SECUNDARIA, 2010 DE AL MENOS CINCO AÑOS DE EDUCACIÓN TERCIARIA ENTRE (Porcentajes) JÓVENES DE 25 A 29 AÑOS, SEGÚN QUINTILES DE INGRESO PER CÁPITA Y SEXO, ALREDEDOR DE 2010 (Porcentajes) 100 40 90 Quintil 1 Quintil 5 78 35 32.1 80 Hombres Mujeres 70 30 60 25 22.6 50 20 40 30 13.1 15 12.3 20 28 9.0 10 10 6.9 6.1 0 3.6 5 2.3 2.2 Nicaragua Rep. Dominicana El Salvador México Paraguay Costa Rica Bolivia Argentina Brasil Colombia Chile Promedio Guatemala Honduras Uruguay Panamá Venezuela Ecuador Perú 1.3 1.4 0 Quintil 1 Quintil 2 Quintil 3 Quintil 4 Quintil 5 Total Fuente: CEPAL sobre la base de tabulaciones especiales de las encuestas de hogares de los países. Nota: El dato de Argentina corresponde al Gran Buenos Aires y el de Uruguay a zonas urbanas. Challenges of Latin America and the Caribbean in front of the development crossroads Antonio Prado
With social progress, the region still remains the worst distribution of income, and other inequalities LATIN AMERICA: a POVERTY AND INDIGENCE, 1980-2014 b LATIN AMERICA AND OTHER WORLD REGIONS: GINI COEFFICIENT, AROUND 2010 (Percentages) 0.60 60 0.50 48.4 50 0.50 0.45 43.8 43.9 41.9 0.41 40 0.40 0.37 0.34 0.34 33.5 0.33 29.6 28.1 28.1 28.0 0.30 30 22.6 19.3 18.6 20 0.20 15.3 12.9 12.0 11.7 11.6 11.3 10 0.10 0.00 0 Latin Sub- East Asia North South Western OECD 1990 1999 2002 2005 2008 2011 2012 2013 2014 America Saharan and the Africa and Asia Europe and (22) and the Africa Pacific Middle (8) Central Caribbean (39) (10) East (9) Asia (21) Poor Indigent (18) Source: ECLAC, on the basis of special tabulations of data from household surveys. Source: ECLAC, on the basis of special tabulations of data from household surveys in a Estimate for 18 countries of the region plus Haiti. the respective countries. c The 2014 figures are projections. Challenges of Latin America and the Caribbean in front of the development crossroads Antonio Prado
Vulnerability has come down considerably, but still applies to half the population LATIN AMERICA (WEIGHTED AVERAGE FOR 18 COUNTRIES AND FOR 8 COUNTRIES): PROFILE OF INCOME VULNERABILITY, AROUND 1990, 2002, 2008 AND 2013, AND BY RACE OR ETHNIC GROUP, AROUND 2011 (Percentages) Source : ECLAC, Inclusive social development: the next generation of policies for overcoming poverty and reducing inequality in Latin America and the Caribbean , Santiago, November, 2015. a Weighted average for the Plurinational State of Bolivia (2009), Brazil (2011), Chile (2011), Ecuador (2011), Mexico (2010), Paraguay (2011), Peru (2011) and Uruguay (2011). Challenges of Latin America and the Caribbean in front of the development crossroads Antonio Prado
With challenges of environmental sustainability to move towards low-carbon paths LATIN AMERICA: PER CAPITA GDP AND PER CAPITA ENERGY GLOBAL TRENDS IN GREENHOUSE GAS EMISSIONS, CONSUMPTION, 2008 1990-2011 (Kilograms of oil equivalent and 2005 purchasing power parity (Percentages of global emissions) dollars) Source: Economic Commission for Latin America and the Caribbean (ECLAC), Source: Economic Commission for Latin America and the Caribbean (ECLAC), Structural Change for Equality: an integrated approach to development The European Union and Latin America and the Caribbean in the new (LC/G.2524(SES.34/3)), Santiago, Chile, 2012. economic and social context , Santiago, 2015. Challenges of Latin America and the Caribbean in front of the development crossroads Antonio Prado
Five major structural challenges Challenges of Latin America and the Caribbean in front of the development crossroads Antonio Prado
1. Insufficient investment for development and innovation GROSS FIXED CAPITAL FORMATION, 1970-2014 (Percentages of GDP, on the basis of dollars at constant 2005 prices) In infrastructure 45 In research, science 40 and innovation 35 In development 30 banking: inclusive 25 financing 23.6 20.4 20.5 20.8 20.4 In cleaner 19.5 20 production solutions 15 10 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Latin America Eastern Asia and Pacific Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures and World Bank, World Development Indicators. Challenges of Latin America and the Caribbean in front of the development crossroads Antonio Prado
2. Insufficient and limited fiscal space: little and poor taxation INTERNATIONAL COMPARISON OF THE LEVEL AND STRUCTURE OF THE TAX BURDEN (Percentages of GDP) Regressive tax structure Low tax burden in most countries High evasion Widespread exemptions Social spending has a limited redistributive impact Source: Economic Commission for Latin America and the Caribbean (ECLAC), Organization for Economic Cooperation and Development (OECD) and International Monetary Fund (IMF). a The coverage for calculating the Latin American average refers to central government except in Argentina, Brazil, Chile, Costa Rica and the Plurinational State of Bolivia, where it refers to general government. Challenges of Latin America and the Caribbean in front of the development crossroads Antonio Prado
3. The production structure has not changed: it is heterogeneous and a source of inequalities LATIN AMERICA (18 COUNTRIES): STRUCTURAL LATIN AMERICA (18 COUNTRIES): GDP PER WORKER, PPP HETEROGENEITY INDICATORS, AROUND 2009 AROUND 2009 (Percentages) (Thousands of dollars) Source : ECLAC, on the basis of R. Infante, “América Latina en el ‘umbral del desarrollo’ . Un ejercicio de convergencia productiva”, Working Paper , No. 14, Santiago, Chile, June 2011, unpublished. Challenges of Latin America and the Caribbean in front of the development crossroads Antonio Prado
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