Economic and social overview of Latin America and Caribbean Meeting of the Regional Coordination Mechanism for Latin America and the Caribbean - Santiago, 24 January 2013 Antonio Prado, Deputy Executive Secretary
Contents • The region in the context of the global crisis: recent trends in economic and social development • Long-run challenges to achieve structural change for equality
Crises have traditionally cut deep into the social fabric in the region LATIN AMERICA AND THE CARIBBEAN: COMPARISON OF PER CAPITA GDP AND POVERTY RATES, 1980-2011 Poverty GDP per capita Source: ECLAC, on the basis of specia tabulations of household surveys
There has been a clear reduction in inequality since 2002, and this continued in 2011 LATIN AMERICA (18 COUNTRIES): GINI COEFFICIENT, 2002-2011 AND 2010-2011 Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries. a Data for urban areas in Argentina, Ecuador and Uruguay. Data for 2002 are from 2002 except for Brazil, El Salvador, Nicaragua, Paraguay and Peru (2001), Argentina (2004) and Chile (2000). Data for 2011 are from 2011 except for Costa Rica, Nicaragua and the Plurinational State of Bolivia (2009), El Salvador, Honduras and Mexico (2010) and Guatemala (2006). b Data for urban areas in Argentina. Data for 2010 refer to figures for 2009 in Brazil and Chile.
This crisis current is different: a recession caused by a financial crisis arising from private over indebtedness • Recessions of this sort are longer and impact more heavily on output and employment. • Recoveries are precarious and highly vulnerable to economic or financial volatility. • Necessary private debt reduction takes place in periods of slack economic activity and asset value slippage. • Deleveraging and recomposition of private savings make monetary stimulus measures less effective. • Emerging economies and South-South trade have been key in global growth
Since the beginning of this crisis, Latin America and the Caribbean showed a certain resilience Downside Upside Trade contraction, especially GDP growth of 3.1% (above towards Europe and China the global average of 2.2%) in 2012 Adverse climate factors (soy) Fall in unemployment (to Insufficient investment 6.4%) and an increase in limited the growth capacity average wages (supply) Accommodative monetary Some exchange rate volatility policy and continued reserve (Brazil and Mexico) accumulation Lower financial inflows to the Increased investment and region consumption Fiscal prudence
External context 2012 • Financial, fiscal and competiveness imbalances in the Euro area were associated with: – A recession in the majority of the countries of the EZ, with economic growth of -0.5% – A slow process of joint problem solving, although with the decision of the ECB to intervene under certain conditions – Financial instability, though with improvements in the risk premiums in the EZ during the second half • Slowdown in China , from 9.2% in 2011 to 7.7% in 2012 • Modest growth in the USA , between 1.8% and 2.1% • Absence of shocks in the oil market
Global economic growth decelerated GLOBAL GDP GROWTH BY REGION, 2010 – 2013 (in percentage) 12 10.3 10 9.2 7.9 7.7 7.7 8 6.0 5.7 6 5.1 4.7 4.5 4.3 4.0 3.8 4 3.1 2.7 2.4 2.4 2.2 2.1 2.1 1.8 1.7 2 1.5 1.5 0.6 0.3 0 -0.5 -0.7 -2 2010 2011 2012 a/ 2013 b/ World Euro area United States Latin America and the Caribbean Developing economies China Japan Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on UN/DESA. a/ Estimate. b/ Projection.
Regional GDP grew by 3.1% in 2012, above the global average (2.2%) LATIN AMERICA AND THE CARIBBEAN: CONTRIBUTION TO REGIONAL GDP GROWTH BY COUNTRY, 2004 – 2012 a 7% Brazil 6% 5% Argentina 4% The Caribbean 3% 2% Mexico 1% Central America 0% -1% Rest of South America -2% Latin America and the -3% Caribbean 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures. a Figures for 2012 correspond to estimations.
The majority of Latin America countries posted growth above 3.1% in 2012 LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH RATES, 2012 a (Percentages) Panama 10.5 Peru 6.2 Chile 5.5 Venezuela (Bol. Rep. of) 5.3 Costa Rica 5.0 Bolivia (Plur. St. of) 5.0 Ecuador 4.8 Colombia 4.5 Central America (9 countries) 4.2 Nicaragua 4.0 Uruguay 3.8 Mexico 3.8 Dominican Republic 3.8 Honduras 3.5 Guatemala 3.3 Latin America 3.1 Latin America and the Caribbean 3.1 Cuba 3.0 South America (10 countries) 2.7 Haiti 2.5 Argentina 2.2 El Salvador 1.2 Brazil 1.2 The Caribbean 1.1 Paraguay -1.8 -4 -2 0 2 4 6 8 10 12 Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures. a Estimate
Growth in the Caribbean increased from 0.4% in 2011 to 1.1% in 2012 THE CARIBBEAN: GDP GROWTH RATES, 2012 a (Percentages) Belize 4.2 Guyana 3.8 Suriname 3.6 Latin America and the Caribbean 3.1 Bahamas 2.5 Dominica 1.6 Saint Vincent and the Grenadines 1.5 The Caribbean 1.1 Trinidad and Tobago 1.0 Antigua and Barbuda 0.9 Saint Lucia 0.9 Barbados 0.2 Granada 0.2 Jamaica -0.2 Saint Kitts and Nevis -0.8 -2 -1 0 1 2 3 4 5 Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures. a Estimate
Consumption continued to be the most important driver of growth LATIN AMERICA: CONTRIBUTION TO GDP GROWTH, 2008 – 2012 a (As a percentage of GDP) 10% 8% 6% 4% 2% 0% -2% -4% 2008 2009 2010 2011 2012 Private Consumption General Government Consumption Investment Net Exports GDP Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures. a Figures for 2012 correspond to estimations.
The region’s investment coefficient has continued to grow persistently LATIN AMERICA: GROSS FIXED CAPITAL FORMATION AS A PERCENTAGE OF GDP, 1980 – 2012 a (2005 constant dollars) 30% 25% 20% 15% 10% 5% 0% 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures. a Figures for 2012 correspond to estimations.
FDI inflows remained above 120 billion dollars LATIN AMERICA AND THE CARIBBEAN: FOREIGN DIRECT INVESTMENT INFLOWS, 2008 – 2012 a (In millions of dollars) 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 2008 2009 2010 2011 2012 Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures. a Figures for 2012 correspond to estimations.
10% 12% 14% 16% 0% 2% 4% 6% 8% January LATIN AMERICA AND THE CARIBBEAN: CONSUMER PRICE INDEX, Jan 2008 – Oct 2012 February March Inflation slowed, with some exceptions April May 2009 June July August September CPI October November December January (Rate of change over twelve months) February March April May 2010 June July August September October Food November December January February March April May 2011 June July August September October November December Core January February March April 2012 May June July August September October
International reserves accumulation continued throughout the region, though at a slower rate than in 2011 GROSS INTERNATIONAL RESERVES, 2001 - 2012 (Millions of dollars and as a percentage of GDP) 60% 13,772 50% 9,326 40% 62,212 13,120 30% 751 1,856 4,838 377,753 1,400 1,990 20% 165,590 2,524 5,366 6,804 38,943 45,274 25,864 36,402 3,347 10% 0% October 2011 October 2012 Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
Some decline in commodity prices, but with increased volatility INTERNATIONAL PRICE INDICES OF COMMODITIES AND MANUFACTURES, 2008-2012 (2005=100, three month moving average) 360 340 320 300 280 260 240 220 200 180 160 140 120 100 80 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Food Tropical beverages Oils and oilseeds Forestry and agricultural raw materials Minerals and metals Energy Manufactured goods Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on figures from the United Nations Conference on Trade and Development (UNCTAD) and the Netherlands Bureau for Economic Analysis (CPB).
Exchange rate volatility increased in Brazil and Mexico, with a greater diversity in exchange-rate trajectories NOMINAL EXCHANGE RATE, Jan 2008 – Nov 2012 (National currency per dollar, index 01/01/2008=100) 150 140 130 120 110 100 90 80 01-01-2008 01-03-2008 01-05-2008 01-07-2008 01-09-2008 01-11-2008 01-01-2009 01-03-2009 01-05-2009 01-07-2009 01-09-2009 01-11-2009 01-01-2010 01-03-2010 01-05-2010 01-07-2010 01-09-2010 01-11-2010 01-01-2011 01-03-2011 01-05-2011 01-07-2011 01-09-2011 01-11-2011 01-01-2012 01-03-2012 01-05-2012 01-07-2012 01-09-2012 01-11-2012 Brazil Chile Colombia Mexico Peru Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
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