The UN Economic Commission on Latin America and the Caribbean (ECLAC) in its latest economic forecast stated that though the economies were showing signs of recovery but the desirable growth of above 3 percent would be possible only by next year. The various factors expected to play a significant role in the recovery are growing demand for raw materials from China, availability of foreign loans including recently declared WB loan of $14bn, rise in commodity prices and gradual global economic recovery.
The ECLAC forecast shows that the South American economy will contract by 1.9 percent this year before looking up by 2010 at 3.1 percent growth. The contraction is expected to put further pressure on unemployment in the region at about 9 percent by the year end, adding more than 3mn people to the 180mn living below the poverty line.
ECLAC’s head Alicia Bárcena was of the opinion that the downturn had bottomed up in March 2009 and remaining months in the year would inch towards a full recovery. At another occasion, the vice-president for Latin America, Pamela Cox said the unusual sum was allocated to the region since the governments did not have access to capital markets, or had some access but did not want to crowd out the private sector.
The projections show that the Mexican economy will be worst hit by plunging about 7 percent this year, and is expected to grow by 2.5 percent next year. On the contrary, Panama and Peru are likely to grow by 5 percent next year by doubling their growth from the current 2.5 percent.
It should be noted that the growth projections for especially Brazil, a member of BRIC is just 3.5 percent by next year whereas China and India are expected to grow above 7 percent. Interestingly, the region has to grow at least by 5 percent to accommodate freshers that are coming into the employment scene every year.
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