Latin America: growth and current scenario

Latin America's GDP is growing and will also increase in 2012 and 2013. According to the report “Current Situation and Prospects for the World Economy” published by the United Nations Conference on Trade and Development (UNCTAD), a permanent intergovernmental body of the United Nations, there will be an increase in GDP of 3.3% in 2012 and 4.2% in 2013. The whole macro-area had experienced a growth of 4.3% in 2011 and 6% in 2010.

Analyzing these percentage increases by breaking them down by region, UNCTAD economists projected for South America an increase in GDP of 3.6% in 2012 and 4.5% for the following year (in 2011 it had been 4.6%); for Mexico and Central America an increase of 2.7% in 2012 and 3.6% in 2013; and for the Caribbean countries the projections indicate +3.6% and +4.3%, respectively.

If South America's growth process in 2011 can be attributed to job creation (which in turn reduced the rate of poverty and inequality), a significant increase in private consumption and commodity prices, the slowdown expected in 2012 is mainly due to the threats of recession coming from the Western world and in particular from the Eurozone, strangled by the debt crisis: it is therefore logical that the repercussions of what is happening in Brussels will also be felt in Brasilia, Buenos Aires and Santiago.

Despite Europe's difficulties with the implications they entail, South America, and Latin America more generally, represents to date one of the fastest growing regions from an economic point of view, capable of finally being able to count on stability and political credibility: just to give an example, Brazil now ranks sixth in the world in terms of GDP, has tremendous growth prospects, a public debt that stands at around 55% of GDP and a budget surplus of 2.9% of GDP.

Countries such as Brazil and Chile have very low foreign debt, hold large stocks of foreign currency and are able to attract huge amounts of foreign investment. In short, their foreign financial exposure has gradually improved over time, resulting in a reversal of money flows: no longer from developed to developing countries, but vice versa. The consequences of this in terms of global governance could be truly explosive, especially with regard to Brazil's position: if in the 1980s and 1990s it was the United States that dictated the conditions for fiscal consolidation (precisely with Latin American countries) through the Washington Consensus, it cannot be ruled out, especially if the IMF were to intervene more forcefully with regard to the countries belonging to the Euro, that in the coming years the scenario will change the role of the actors involved.

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