Friday, October 15, 2010

Good news on the Latin American economy

Chile has given Latin America exposure with headlines around the globe about the miner rescue. However the continent in general doesn't get that much media attention. While those of us who advocate for poverty awareness concentrate on Africa and Asia, Latin America is also in need of development.

Yet in a commentary for McClatchy Newspapers, Frida Ghitis says that there is a lot of good news about the economy in Latin America. While America might soon have a double dip recession, Latin America has recovered and continues to boom. We found Ghitis commentary at the Winnipeg Free Press.

With the notable exception of Venezuela and its few imitators, Latin economies are booming. In some -- Brazil, for example -- the country not only moved quickly out of the global recession but emerged at such a scorching pace that the most serious challenge for policy-makers is slowing down the economy lest it overheat. With the United States and Europe struggling to keep from plunging back into recession, Brazil's economy grew at a blistering 8.9 per cent in the first half of 2010.

The latest analysis from the International Monetary Fund predicts 2010 GDP up 7.5 per cent in Brazil, just one example of a regional phenomenon. Brazil, Peru, Argentina, each should grow more than 7.5 per cent, a number that American and European leaders would not contemplate even in their wildest prosperity fantasies.

Chile, which suffered a devastating and costly earthquake this year, will still expand five per cent. Uruguay's 2010 forecast stands at 8.5 per cent, Paraguay at nine per cent and Colombia, still fighting -- although winning -- a war against leftist insurgents should expand 4.7 per cent.

To be sure, poverty remains an urgent problem in most of the region, and prosperity has been too slow to reach the poorest. But a middle class is emerging. Corruption and a weak education infrastructure are still a problem. Also troubling is how much of the growth still comes from selling commodities -- raw materials -- to other countries, particularly China. Commodity exports risk plummeting with sudden drops in price or demand. But some Latin nations are doing a good job of diversifying and salting away their riches in rainy-day funds.

By contrast, Latin America, the land where democracy had such trouble finding its way to people's hearts, has found a strong consensus in favour of democracy. In many countries presidents enjoy stratospheric approval ratings thanks to the strong results they have produced. There is growing agreement that the best approach is to fight poverty aggressively with market-friendly and fiscally responsible policies alongside special programs to lift up the poorest and build up the middle class.

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