PERSPECTIVES: Light Mingles with Shadows in Latin America and the Caribbean

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By J Chandler

A mix of light and shadows pervades Latin America and the Caribbean as respectable economic growth in spite the global financial crisis mingles with the damage caused by climate change -- and the prospects are far from encouraging.

The UN Economic Commission for Latin America and the Caribbean (ECLAC) expects the region to grow by 6 percent in 2010, following a 1.9 percent decline in 2009, thanks to the economic recovery in most countries in the region.

Presenting the report titled 'The Preliminary Overview of the Economies of Latin America and the Caribbean 2010', Alicia Bárcena, ECLAC Executive Secretary said that measures adopted by several countries in the wake of the global financial crisis have been shown to have a positive impact on economic growth, with a 4.8 per cent rise expected for this year in per capita gross domestic product (GDP).

The report finds that the economic revival also had a positive effect on regional employment, with the jobless rate falling from 8.2 percent in 2009 to around 7.6 percent. At the same time, the quality of jobs created also improved.

However, inflation rose slightly from 4.7 percent in 2009 to an estimated 6.2 percent in 2010, mainly due to international prices for some commodities, says the ECLAC report.

The growth of the region's countries has been expectedly uneven, but most recorded positive figures for 2010. ECLAC therefore expects South America to grow by 6.6 per cent, while GDP is expected to rise by 4.9 per cent in Mexico and Central America and by 0.5 per cent in English-speaking and Dutch-speaking Caribbean countries.

Paraguay will record the strongest growth (9.7 per cent), followed by Uruguay (9 per cent), Peru (8.6 per cent) and Argentina (8.4 per cent). Brazil will grow by 7.7 per cent, while Mexico and Chile will expand by 5.3 per cent.

In contrast, Haiti and Venezuela are expected to see GDP fall by 7 per cent and 1.6 per cent, respectively.

ECLAC regrets that from the second half of 2010 onwards, many factors have generated a less optimistic scenario for the international economy, and this combines with weaker demand from public policies and the shrinking of idle productive capacity to give a lower growth forecast for the region of 4.2 percent in 2011 -- approximately a 3 percent rise in per capita GDP.

"Externally, there remains major uncertainty about the robustness of the recovery in developed economies, especially those in Europe. In addition, emerging economies have gained in strength in relative terms, especially Latin American and Caribbean countries, thus increasing the flow of capital towards the region and causing currency appreciations there," said Bárcena.

The report states that the region's economies must invest more in order to increase their capacity for growth. Despite progress made to date, Latin America and the Caribbean is some way off the levels of investment observed in the 1970s.

"The region’s main challenge is to rebuild its capacity to implement countercyclical actions and to create the conditions for productive development not based solely on the export of commodities," says ECLAC Executive Secretary Bárcena.

The report states that, following the plunge observed in 2009 as a result of the crisis, the region's countries are now rebuilding their public accounts, mainly by improving fiscal revenues. In terms of central governments, at the end of 2010 the fiscal performance of Latin America posted a primary deficit of 0.5 percent of GDP as a simple average, compared with a deficit of 1.1 percent for 2009. Considering the overall result (including interest payments on the public debt), the deficit went from 2.9 percent to 2.3 percent of GDP.

For 2011, the fiscal accounts are expected to see a new improvement, with a primary deficit of 0.2 percent of GDP and an overall deficit of 2 percent of GDP.


The dark shadows on the region are described by a report produced by the UN Environment Programme (UNEP). Launched on December 6, it points out that the number of people in the region affected by extreme weather events, including high temperatures, forest fires, droughts, storms and floods grew from 5 million in the 1970s to more than 40 million between 2000 and 2009.

Using charts, graphs and maps, the report entitled 'Vital Climate Change Graphics for Latin America and the Caribbean' depicts the major signs of climate change in the region, its physical impacts and calculates current levels of greenhouse gas emissions and possibilities for mitigation.

Adverse weather conditions have cost the region more than $40 billion over the past decade, according to the report, which was released at the UN climate change conference November 29 to December Cancun, Mexico.

Produced in collaboration with the Sustainable Development and Human Settlements Division of the Economic Commission for Latin America and the Caribbean (ECLAC) and UNEP's Polar Research Centre, the report also forecasts future climate scenarios for the region.

Graphics show that by 2050, rises in the temperature of ocean surfaces will result in more frequent bleaching of coral reefs, with a negative impact on tourism and fishing. In 1970, only a small number of countries in Latin America and the Caribbean were home to mosquitoes that transmit yellow fever, dengue fever and malaria. However, by 2002, the vast majority of the region was affected by these tropical diseases, the report says.

It also points out that although the contribution of Latin America and the Caribbean to greenhouse gas emissions represents only 8 per cent of global emissions -- excluding those related to land use change -- the expected changes in climate during the present century will have a significant impact on the region.

Basing facts on historical analysis of variables such as temperature, precipitation and sea levels, the report outlines for decision makers, academics and the general public the effects and causes of these climate change phenomenon. It shows that countries in the region will require resources and assistance to reduce their vulnerability and enhance their resilience to the harmful impacts of climate change.

The report also highlights the growing need for regional coordination and sharing of best practices in drawing up sustainable policies and designing technologies and investment options to reduce harmful gas emissions through expanding the sources of clean and renewable energy, increasing energy efficiency and adopting energy-saving measures.

The graphics show the need for rapid advances in reducing emissions resulting from deforestation and forest degradation in order to reverse the negative trends.

The report notes that many countries in the region have already initiated policies, investment strategies and solutions to deal with climate change, but those programmes require strengthening at both national and regional levels. - IDN-InDepthNews








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