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GDP: Panama El Mejor, Mexico necesita recuperarse

04/15/2008 - Panama

Panama will continue to have Latin America's highest economic growth, while Mexico will have the lowest, according to a Latin Business Chronicle analysis of new data from the International Monetary Fund (IMF).

All in all, Latin America is expected to increase its GDP this year by 4.4 percent, the fund said in its latest World Economic Outlook released last week. That's a slight revision upwards from the 4.3 percent GDP growth the IMF had forecast earlier. It's also better than the IMF's forecast for global growth (3.7 percent) and economic growth in the United States (0.5 percent), the European Union (1.8 percent) and newly industrialized Asian economies (3.9 percent). However, Latin America will lag areas like developing Asia, Africa, the Middle East and the Commonwealth of Independent States when it comes to GDP growth this year.

Latin America and the Caribbean: Positive 2008 Outlook

Date: 2007-12-28

By www.web.worldbank.org/

The World Bank expects Latin America and the Caribbean’s economy to grow about 5.1 percent this year, up from a previous forecast of 4.8 percent, but sees growth coming down slightly in 2008 given the stabilization of commodity prices and the impact of the U.S. economic slowdown. While countries that export commodities have benefited from high prices, others, such as Central American countries, have been hit hard, as they are net importers of foods and energy, the Bank said.

"The good news is that there is good news in Latin America", said Pamela Cox, World Bank Vice President for Latin America and the Caribbean, during an end-of-year press briefing in Washington. Cox added that Latin America remains well prepared to face the mortgage loan crisis unleashed in the U.S. "Latin America is in a far better position than it has been in the past. Countries are running good, external surpluses; we have seen a strengthening of budgeting policies and strengthening of financial sector policies in Latin America, which makes it much more resilient than in the past", she emphasized.

However, she explained that it is still unclear "what the impact will be in the rest of the world", and warned that dangers still lurk for the region, particularly in "those countries that have strong trade ties with the U.S. and those countries that receive a large amount of remittances from the U.S." Some effects have been noticed already in the last quarter of this year, though only in Mexico and Central America, where remittances sent by immigrants in the U.S. declined, especially from those who work in the construction industry.

"Overall, we are going into 2008 very positive about the developments in Latin America and very positive about the role of the World Bank in the region", Cox added.

"A little competition is a good thing", she said, referring to the announced creation of Bank of the South (Banco del Sur). "No country in the region needs to come to the World Bank for financial services only", added Cox, when they do it is "because we facilitate development solutions, the help, and the assistance in working through the problems. Our role in the region is not just about money…it is also about the knowledge and the experience and the problem solving and implementation support we give."

According to the regional Vice President, the World Bank differs from regional institutions in that "we are a global institution, and we provide more of the global perspective, the global experience". She explained that countries in the region often want to hear not just about how other Latin American countries do things but how China or India does it. "And vice versa", Cox added, "we have many countries coming to the region to see some of the things Latin America has done, for example, the conditional cash transfer systems. Egypt is looking at this, Indonesia is looking at this, and the City of New York is implementing this."

To compete better globally against other regions like Asia or Eastern Europe, Cox said that the region should invest in improving the quality of education, research and development and innovation, as well as reducing the cost of doing business in the region. "China invests 3 percent of its gross domestic product in research and innovation, but Latin America invests only 1 percent as a region", she concluded.