Reporting from Santiago, Chile — Buoyed by its prudent fiscal policies and growing global demand for its commodities, Latin America will see solid economic growth in 2010 and 2011, according to new reports issued Wednesday by the World Bank and the International Monetary Fund.
The region generally has resisted the ripple effects of the global crisis better than more-developed nations, the institutions said at their joint annual meeting in Washington. That's a marked contrast to past global crises that weighed heavily on Latin American economies.
Latin America's output of goods and services will grow 5.7% in 2010 and 4% in 2011, according to the World Bank forecast, well above the projected global rate of 4.8% and 4.2%, respectively. The U.S. economy is expected to grow 2.6% in 2010 and 2.3% next year.
The region is being led by Brazil, Peru and Argentina, each of which could see growth of 7.5% this year and at least 4.5% in 2011. The World Bank and IMF highlighted Brazil's emergence as a budding economic superpower, with its rising exports of iron ore, beef, soy and sugar as well as strong domestic consumption, credit growth and poverty reduction at home.
Mexico, which the World Bank projects will grow 5% this year and 3.75% next year, still lags behind the rest of the region, largely because of its heavy dependence on exports to the United States.
The World Bank and IMF credited Latin America for good fiscal and debt management, rising foreign investment and strong links to China, the main customer for the region's commodities including chicken, beef, copper and timber.
Some Latin American nations had large reserves of foreign currency before the global crisis, which helped cushion the effect, said the World Bank report written by chief Latin America economist Augusto de la Torre.
The World Bank and IMF urged Latin American nations to take advantage of strong demand for commodities by setting up special windfall savings funds for use in emergencies, much as Chile has done with its recent copper profits.
Kraul is a special correspondent.