THE ECONOMIES OF LATIN AMERICA AND THE CARIBBEAN: SITUATION AND PROSPECTS Inés Bustillo Director, Washington Office Economic Commission for Latin America and the Caribbean Washington DC –
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Slide 1
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 2
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 3
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 4
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 5
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 6
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 7
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 8
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 9
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 10
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 11
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 12
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 13
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 14
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 15
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 16
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 17
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 18
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 19
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 20
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 21
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 22
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 2
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 3
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 4
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 5
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 6
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 7
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 8
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 9
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 10
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 11
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 12
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 13
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 14
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 15
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 16
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 17
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 18
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 19
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 20
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 21
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
Slide 22
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009
The developed countries have entered a recession
DEVELOPED COUNTRIES: “GDP GROWTH”
(Percentages)
3.5
3.5
3.0
2.5
2.0
1.5
1.0
3.0
2.5
2.0
1.5
0.5
0.0
1.0
-0.5
-1.0
0.5
2006
2007
2008
2009
0.0
-0.5
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-1.0
-1.5
United States
Euro Zone
Japan
Q2
Q3
Q4
Q1
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0
Projections on US economic growth
2009
Real GDP
2010
Date of Forecast
A. What Government Agencies Say
FED*
CBO
-1.3 to -0.5%
-3.0%
2.5 to 3.3%
2.9%
Jan-09
Mar-09
-3.2%
-2.9%
-3.0%
-3.0%
-3.1%
-2.5%
-2.9%
-1.1%
-2.9%
1.2%
1.4%
2.0%
1.4%
0.7%
2.7%
0.9%
2.8%
Mar-09
May-09
May-09
May-09
Mar-09
May-09
May-09
Apr-09
-3.5%
-2.4%
-4.0%
-2.8%
1.0%
2.0%
0.0%
0.0%
May-09
Mar-09
Mar-09
Apr-09
B. What Markets Say
Goldman Sachs
National Association of Realtors
Bank of America/Merrill Lynch
Moody's Economy.com
The Economist Intelligence Unit
JPMorgan
Wachovia
Mortgage Bankers Association*
Market Average**
C. What International Organizations Say
United Nations DESA (Baseline)
World Bank
OECD
IMF
* Forecast on a Q4 to Q4 basis. ** Average does not include the Mortgage Bankers Association.
Note: the CBO, IMF, and OECD forecasts on a Q4 to Q4 basis are -1.5%, -2.2%, and -3.5%,
respectively, for 2009.
Economic situation
prior to crisis
Regional GDP was up by 4.6% in 2008, completing sixth
consecutive years of economic growth
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2008
(Percentages)
Uruguay
Peru
Panama
Paraguay
Argentina
Ecuador
Brazil
South America
Bolivia
Venezuela (Bol. Rep. of)
Latin America and the Caribbean
Dominican Republic
Central America
Cuba
Honduras
Chile
Guatemala
Costa Rica
Nicaragua
El Salvador
Colombia
Caribbean
Mexico
Haiti
11.5
9.4
9.2
7.0
6.8
6.5
5.9
5.9
5.8
4.8
4.6
4.5
4.4
4.3
3.8
3.8
3.3
3.3
3.0
3.0
3.0
2.4
1.8
1.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
The per capita GDP of the Latin American and Caribbean
region grew by more than 3% for the fifth year in a row
Growth has been coupled with improvements
in labour-market indicators
LATIN AMERICA AND THE CARIBBEAN: EMPLOYMENT AND UNEMPLOYMENT
Employment rate (left axis)
2008
2007
2006
2005
2004
2003
6.00
2002
50.0
2001
7.00
2000
51.0
1999
8.00
1998
52.0
1997
9.00
1996
53.0
1995
10.00
1994
54.0
1993
11.00
1992
55.0
1991
12.00
1990
56.0
Unemployment rate (right axis)
Higher growth rates, lower unemployment and better-quality
jobs have helped improving poverty indicators.
In 2008, poverty levels decreased slightly,
but no reduction was seen in indigence
LATIN AMERICA: EVOLUTION OF POVERTY AND INDIGENCE LEVELS, 1980 – 2008 a
(In percentages and millions of people)
60
48,3
50
40,5
300
43,5
43,8
44,0
40
30
20
250
36,3
18,6
22,5
19,0
18,5
34,1
33,2
12,6
12,9
19,4
13,3
10
200
150
100
200
221
204 211
93
89
193 184 182
136
62
89
97
71
68
71
50
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
0
1980 1990 1997 1999 2002 2006 2007 2008
b/
Indigents
Non-indigent poor
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted
in relevant countries.
a Estimate for 19 countries of the region, including Haiti. The figures appearing above the bars in each chart represent the percentage of the
population and the total number of poor persons (indigents plus non-indigent poor).
b Projections.
Transmission channels
and impact
The international crisis is being transmitted to the
region through various channels, though not to the
same extent in all the countries
One by one, the engines of growth
are shutting down
The real economy
Slowdown in exports
Falling commodity prices
Lower remittances
Reduced revenues from tourism
Smaller inflows of foreign direct investment (FDI)
The financial sector
Higher cost of external credit
Reduced availability of international financing
50
Food
Minerals
Petroleum
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
500
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
Commodity prices are falling but they
may remain relatively high
COMMODITY PRICE INDICES
(2000=100)
450
400
350
300
250
200
150
100
The region’s terms of trade continued to improve
in 2008 but are expected to worsen in 2009
LATIN AMERICA (19 COUNTRIES): TERMS OF TRADE, 2008-2009
(Percentages)
24.0
20.9
20.0
16.0
12.0
8.0
7.9
5.9
4.6
4.9
2.1
4.0
2.8
0.0
-4.0
-3.4
-8.0
-7.5
-12.0
-16.0
-5.3
-7.5
-12.8
-20.0
-18.6
-24.0
-28.0
-27.2
-29.4
-32.0
Latin Am (19)
South Am (10)
Mercosur (4)
2008
Rest South Am (6)
-30.5
Chi+Per
2009
Bol+Col+Ecu+Ven
Central Am (8)
Mexico
Not all the economies are exposed in
the same way
Latin America: degree of exposure of the demand
components (% of GDP)
Panama
Honduras
Nicaragua
Paraguay
Ecuador
Chile
Costa Rica
Venezuela
El Salvador
Bolivia
Mexico
R. Dominicana
Haiti
Guatemala
Peru
Uruguay
Argentina
Colombia
Brazil
0
10
20
Exports
30
Private consumption
40
50
Public consumption
60
Investment
70
80
Amidst increased volatility, the perceived risk
associated with emerging economies is on the rise
Latin America: EMBI+ spread, 1996-2009
(In basis points, end of period; for 2009, end of January)
1500
1400
1300
1200
1100
Risk has increased less
than in other crises
1000
900
800
700
600
500
400
300
200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1Q
4Q
3Q
2Q
1Q
4Q
2Q
3Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
4Q
1Q
3Q
2Q
1Q
4Q
3Q
1Q
2Q
4Q
3Q
2Q
1Q
3Q
4Q
2Q
1Q
4Q
3Q
2Q
1Q
0
2009
Preparedness to face crisis:
Reserves
Public
debt
In 2009, the region’s growth is expected to
slow dramatically
LATIN AMERICA AND THE CARIBBEAN: ESTIMATED GROWTH FOR 2009 (%)
4.0
Panamá
Perú
Cuba
Bolivia
Uruguay
República Dominicana
Honduras
Guatemala
Argentina
Nicaragua
Venezuela
Colombia
Haití
El Salvador
Caribe
Ecuador
Chile
América Latina y el Caribe
Paraguay
Costa Rica
Brasil
M éxico
3.5
3.0
3.0
2.5
1.5
1.5
1.5
1.5
1.0
1.0
0.5
0.5
0.5
0.1
0.0
0.0
-0.3
-0.5
-0.5
-1.0
-2.0
-3
-2
-1
0
1
2
3
4
5
Evolution in the level of activity will have a
negative impact on labor-market indicators
LATIN AMERICA AND THE CARIBBEAN: OCCUPATION AND UNEMPLOYMENT
Employment rate (left axis)
Unemployment rate (right axis)
2009
2008
2007
2006
2005
2004
2003
6,0
2002
50,0
2001
7,0
2000
51,0
1999
8,0
1998
52,0
1997
9,0
1996
53,0
1995
10,0
1994
54,0
1993
11,0
1992
55,0
1991
12,0
1990
56,0
Economic policy
responses
The response capacity to the crisis is
also different
Scope of measures to tackle the crisis
Monetary and Financial Policy
19
18
a
b
17
16
Reduction or relaxation of reserve requirements
Provision of liquidity in national currency
Fiscal Policy
15
c
d
14
13
12
11
Tax cuts or increased subsidies
Spending increased or brought forward
(infrastructure)
Exchange-rate and external trade policy
10
e
f
g
h
9
8
7
Increased tariff or import restrictions
Tariff cuts
Financing of exporters
Obtaining credit from international
financial bodies
6
Sectoral Policies
5
4
i
j
k
3
2
1
Housing
Small and medium-sized enterprises
Sectoral policies
Employment and social policies
0
a
b
c
d
e
f
g
h
i
j
k
l
m
l
m
Promoting job creation
Social programmes
The impact of the announced
measures is different
COUNTRIES THAT ANNOUNCED QUANTIFIABLE INCREMENTS IN 2009 PUBLIC EXPENDITURE
Estimated impact as % of GDP
5,7%
Argentina
4,2%
Colombia
2,4%
Perú
2,2%
Chile
1,9%
Bolivia
1,4%
América Latina
1,0%
Brasil
Guatemala
Costa Rica
México
Honduras
0,0%
0,8%
0,7%
0,6%
0,6%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
Beyond the
current cycle
Lessons learned
Avoiding protectionism
Preventing the crisis from increasing inequity as a
result of biased measures
Protecting the countries’ capacity to maintain
social spending, especially spending aimed at
building human capital
Continuing to invest in infrastructure
“Green deal”
THE ECONOMIES OF LATIN
AMERICA AND THE CARIBBEAN:
SITUATION AND PROSPECTS
Inés Bustillo
Director, Washington Office
Economic Commission for
Latin America and the Caribbean
Washington DC – 20 May 2009