The World Bank - October 9, 2013
WASHINGTON, OCTOBER 9, 2013 – For the first time, currencies
in Latin America and the Caribbean (LAC) are absorbing some of the
shocks derived from a less friendly global environment, according to the
latest report by the World Bank Chief Economist Office for Latin
America and the Caribbean, Latin America’s Deceleration and the Exchange Rate Buffer.
Depreciated currencies not only lower the cost of exports but also
raise the cost of imports, making the export and local industries more
competitive and boosting job creation.
LAC, together with other emerging markets, is entering a new phase of
lower growth dynamics, as the tailwinds that blew so favorably in its
direction in the recent past continue to recede. Growth rates in
middle-income countries in Eastern Europe, East Asia, and LAC, as well
as China have declined by about 3 percentage points from their 2010
peaks to the present. In the case of LAC, the growth rate has fallen
from about 6 percent in 2010 to around 3 percent in 2012 and to an
estimated 2.5 percent in 2013, with a predictable heterogeneity within
the region.
Forecasts go from rates at or below 1 percent for Jamaica and
Venezuela, to Asian-style growth rates of 5.5 and 8 percent for the two
best performers in the region in the past decade, Peru and Panama,
respectively. Reassuringly, a good number of mid-sized LAC countries
(such as Argentina, Chile, Colombia, Costa Rica, Ecuador, Guatemala, and
Uruguay) are beating the regional average, with growth rates in the 3-4
percent range. Regrettably, the region’s giants, Brazil and Mexico, are
growing below the average, with Mexico’s growth falling below 2 percent
despite the ongoing wave of reforms fueling investor optimism.
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