Economic and social overview of Latin America and Caribbean - - PowerPoint PPT Presentation

Economic and social

• verview of Latin

America and Caribbean

Meeting of the Regional Coordination Mechanism for Latin America and the Caribbean - Santiago, 24 January 2013 Antonio Prado, Deputy Executive Secretary

Contents

• The region in the context of the global crisis:

recent trends in economic and social development

• Long-run challenges to achieve structural

change for equality

Crises have traditionally cut deep into the social fabric in the region

LATIN AMERICA AND THE CARIBBEAN: COMPARISON OF PER CAPITA GDP AND POVERTY RATES, 1980-2011

Source: ECLAC, on the basis of specia tabulations of household surveys

Poverty GDP per capita

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.

a Data for urban areas in Argentina, Ecuador and Uruguay. Data for 2002 are from 2002 except for Brazil, El Salvador, Nicaragua, Paraguay

and Peru (2001), Argentina (2004) and Chile (2000). Data for 2011 are from 2011 except for Costa Rica, Nicaragua and the Plurinational State

• f Bolivia (2009), El Salvador, Honduras and Mexico (2010) and Guatemala (2006).

b Data for urban areas in Argentina. Data for 2010 refer to figures for 2009 in Brazil and Chile.

LATIN AMERICA (18 COUNTRIES): GINI COEFFICIENT, 2002-2011 AND 2010-2011

There has been a clear reduction in inequality since 2002, and this continued in 2011

This crisis current is different: a recession caused by a financial crisis arising from private over indebtedness

• Recessions of this sort are longer and impact more

heavily on output and employment.

• Recoveries are precarious and highly vulnerable to

economic or financial volatility.

• Necessary private debt reduction takes place in periods
• f slack economic activity and asset value slippage.
• Deleveraging and recomposition of private savings make

monetary stimulus measures less effective.

• Emerging economies and South-South trade have been

key in global growth

Since the beginning of this crisis, Latin America and the Caribbean showed a certain resilience

Downside

• Trade contraction, especially

towards Europe and China

• Adverse climate factors (soy)
• Insufficient investment

limited the growth capacity (supply)

• Some exchange rate volatility

(Brazil and Mexico)

• Lower financial inflows to the

region

Upside

• GDP growth of 3.1% (above

the global average of 2.2%) in 2012

• Fall in unemployment (to

6.4%) and an increase in average wages

• Accommodative monetary

policy and continued reserve accumulation

• Increased investment and

consumption

• Fiscal prudence

External context 2012

• Financial, fiscal and competiveness imbalances in the

Euro area were associated with: – A recession in the majority of the countries of the EZ, with economic growth of -0.5% – A slow process of joint problem solving, although with the decision of the ECB to intervene under certain conditions – Financial instability, though with improvements in the risk premiums in the EZ during the second half

• Slowdown in China, from 9.2% in 2011 to 7.7% in 2012
• Modest growth in the USA, between 1.8% and 2.1%
• Absence of shocks in the oil market

Global economic growth decelerated

GLOBAL GDP GROWTH BY REGION, 2010 – 2013 (in percentage)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on UN/DESA. a/ Estimate. b/ Projection.

4.0 2.7 2.2 2.4 2.1 1.5

• 0.5

0.3 2.4 1.8 2.1 1.7 6.0 4.3 3.1 3.8 7.7 5.7 4.7 5.1 10.3 9.2 7.7 7.9 4.5

• 0.7

1.5 0.6

• 2

2 4 6 8 10 12 2010 2011 2012 a/ 2013 b/ World Euro area United States Latin America and the Caribbean Developing economies China Japan

LATIN AMERICA AND THE CARIBBEAN: CONTRIBUTION TO REGIONAL GDP GROWTH BY COUNTRY, 2004 – 2012a

Regional GDP grew by 3.1% in 2012, above the global average (2.2%)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.

a Figures for 2012 correspond to estimations.

• 3%
• 2%
• 1%

0% 1% 2% 3% 4% 5% 6% 7%

2004 2005 2006 2007 2008 2009 2010 2011 2012 Brazil Argentina The Caribbean Mexico Central America Rest of South America Latin America and the Caribbean

LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH RATES, 2012a (Percentages)

The majority of Latin America countries posted growth above 3.1% in 2012

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.

a Estimate

• 1.8

1.1 1.2 1.2 2.2 2.5 2.7 3.0 3.1 3.1 3.3 3.5 3.8 3.8 3.8 4.0 4.2 4.5 4.8 5.0 5.0 5.3 5.5 6.2 10.5

• 4
• 2

2 4 6 8 10 12 Paraguay The Caribbean Brazil El Salvador Argentina Haiti South America (10 countries) Cuba Latin America and the Caribbean Latin America Guatemala Honduras Dominican Republic Mexico Uruguay Nicaragua Central America (9 countries) Colombia Ecuador Bolivia (Plur. St. of) Costa Rica Venezuela (Bol. Rep. of) Chile Peru Panama

THE CARIBBEAN: GDP GROWTH RATES, 2012a (Percentages)

Growth in the Caribbean increased from 0.4% in 2011 to 1.1% in 2012

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.

a Estimate

• 0.8
• 0.2

0.2 0.2

0.9

0.9 1.0 1.1 1.5 1.6 2.5 3.1 3.6 3.8 4.2

• 2
• 1

1 2 3 4 5 Saint Kitts and Nevis Jamaica Granada Barbados Saint Lucia Antigua and Barbuda Trinidad and Tobago The Caribbean Saint Vincent and the Grenadines Dominica Bahamas Latin America and the Caribbean Suriname Guyana Belize

Consumption continued to be the most important driver of growth

LATIN AMERICA: CONTRIBUTION TO GDP GROWTH, 2008 – 2012a (As a percentage of GDP)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.

a Figures for 2012 correspond to estimations.

• 4%
• 2%

0% 2% 4% 6% 8% 10% 2008 2009 2010 2011 2012

Private Consumption General Government Consumption Investment Net Exports GDP

The region’s investment coefficient has continued to grow persistently

LATIN AMERICA: GROSS FIXED CAPITAL FORMATION AS A PERCENTAGE OF GDP, 1980 – 2012a (2005 constant dollars)

0% 5% 10% 15% 20% 25% 30% 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.

a Figures for 2012 correspond to estimations.

FDI inflows remained above 120 billion dollars

20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 2008 2009 2010 2011 2012

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.

a Figures for 2012 correspond to estimations.

LATIN AMERICA AND THE CARIBBEAN: FOREIGN DIRECT INVESTMENT INFLOWS, 2008 – 2012a (In millions of dollars)

Inflation slowed, with some exceptions

LATIN AMERICA AND THE CARIBBEAN: CONSUMER PRICE INDEX, Jan 2008 – Oct 2012 (Rate of change over twelve months)

0% 2% 4% 6% 8% 10% 12% 14% 16% January February March April May June July August September October November December January February March April May June July August September October November December January February March April May June July August September October November December January February March April May June July August September October 2009 2010 2011 2012 CPI Food Core

International reserves accumulation continued throughout the region, though at a slower rate than in 2011

GROSS INTERNATIONAL RESERVES, 2001 - 2012 (Millions of dollars and as a percentage of GDP)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.

45,274 751 13,772 377,753 38,943 36,402 5,366 6,804 1,400 2,524 1,990 165,590 1,856 4,838 62,212 3,347 9,326 13,120 25,864

0% 10% 20% 30% 40% 50% 60% October 2011 October 2012

INTERNATIONAL PRICE INDICES OF COMMODITIES AND MANUFACTURES, 2008-2012 (2005=100, three month moving average)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on figures from the United Nations Conference on Trade and Development (UNCTAD) and the Netherlands Bureau for Economic Analysis (CPB).

Some decline in commodity prices, but with increased volatility

80 100 120 140 160 180 200 220 240 260 280 300 320 340 360 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12

Food Tropical beverages Oils and oilseeds Forestry and agricultural raw materials Minerals and metals Energy Manufactured goods

Exchange rate volatility increased in Brazil and Mexico, with a greater diversity in exchange-rate trajectories

NOMINAL EXCHANGE RATE, Jan 2008 – Nov 2012 (National currency per dollar, index 01/01/2008=100)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures. 80 90 100 110 120 130 140 150 01-01-2008 01-03-2008 01-05-2008 01-07-2008 01-09-2008 01-11-2008 01-01-2009 01-03-2009 01-05-2009 01-07-2009 01-09-2009 01-11-2009 01-01-2010 01-03-2010 01-05-2010 01-07-2010 01-09-2010 01-11-2010 01-01-2011 01-03-2011 01-05-2011 01-07-2011 01-09-2011 01-11-2011 01-01-2012 01-03-2012 01-05-2012 01-07-2012 01-09-2012 01-11-2012

Brazil Chile Colombia Mexico Peru

• 200,000
• 150,000
• 100,000
• 50,000

50,000 100,000 150,000 200,000 250,000 2008 2009 2010 2011 2012 Portfolio investment outflows Portfolio investment inflows Other investment outflows Other investment inflows Net financial flows (excl. net FDI and errors)

Although the trade channel was most affected, net financial flows to the region also declined

LATIN AMERICA AND THE CARIBBEAN: GROSS CAPITAL FLOWS, 2008 – 2012a (In millions of dollars)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.

a Figures for 2012 correspond to estimations.

In contrast with Latin America, the public debt situation in the Caribbean is a source of vulnerability

LATIN AMERICA AND THE CARIBBEAN: PUBLIC DEBT AS A PERCENTAGE OF GDP, 2011-2012a

Source: Economic Commission for Latin America and the Caribbean, based on official figures.

a Figures for 2012 correspond to: September for Latin America, Bahamas and Belize; August for Suriname; June for Jamaica and Trinidad and

Tobago; and March for Barbados. 20 40 60 80 100 120 140 160

Paraguay Peru Chile Ecuador Suriname Guatemala Haiti Venezuela Honduras Dominican Republic Latin America (19) Nicaragua Bolivia Mexico Trinidad and Tobago Costa Rica Panama Argentina Colombia Uruguay El Salvador Brazil Bahamas Saint Vincent and the Grenadines Saint Lucia Belize Dominica Guyana Antigua and Barbuda Granada Barbados Jamaica Saint Kitts and Nevis

2012 2011

The rise in consumption reflected improved labour market conditions: unemployment fell (to 6.4%) and wages increased

LATIN AMERICA AND THE CARIBBEAN: ECONOMIC GROWTH, INCREASE IN REAL AVERAGE WAGE AND VARIATION IN THE UNEMPLOYMENT RATE

Source: Economic Commission for Latin America and the Caribbean, (ECLAC), based on official figures.

e/ Estimate. 80.00 85.00 90.00 95.00 100.00 105.00 110.00 115.00 120.00

• 4.00
• 2.00

.00 2.00 4.00 6.00 8.00 10.00 12.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 e/ Real Average Salary (Index 2000 = 100) Rates (percentages) Economic Growth Unemployment Rate (left axis) Real Average Wages (right axis)

CENTRAL AMERICA

MEXICO CARIBBEAN BRAZIL

4 5 6 7 8 9 10 2008 2009 2010 2011 2012 e/

Brazil Rest of South America (7 countries) Mexico Central America (3 countries) The Caribbean (3 countries) REST OF SOUTH AMERICA

Evolution of unemployment by sub-region

URBAN UNEMPLOYMENT RATE, 2008 - 2012 (Percentage)

Source: Economic Commission for Latin America and the Caribbean, (ECLAC), based on official figures. e/ Estimate. For the Caribbean: First half of the year.

Salaried employment grew more than own-account work, although at a lower rate than in 2011

LATIN AMERICA: ECONOMIC GROWTH AND EMPLOYMENT DYNAMICS, 2000 - 2012 (Percentage)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures. a/ January-September

• 2
• 1

1 2 3 4 5 6

Salaried Employment Own Account Workers GDP

Formal employment increased, but in various countries at a slower pace

LATIN AMERICA: YEAR-ON-YEAR CHANGE OF FORMAL, SALARIED EMPLOYMENT (Percentage)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures. a/ January-September, except Argentina and Panama, whose data correspond to the period January-June; and Uruguay, January-August.

• 5
• 3
• 1

1 3 5 7 9 Argentina Brazil Chile Costa Rica Mexico Nicaragua Panama Peru Uruguay 2009 2010 2011 2012 a/

LATIN AMERICA: POVERTY AND INDIGENCE, 1980-2012 a (Percentages and millions of people)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.

a Estimate for 18 countries of the region plus Haiti. The figures above the bars refer to the percentage of total poor (indigents and non-indigent

poor). The figures for 2012 are projections.

Both poverty and indigence posted a fresh decline in 2011

LATIN AMERICA (7 COUNTRIES): ANNUAL VARIATION IN TOTAL INCOME PER CAPITA AND INCOME SOURCE IN POOR HOUSEHOLDS,a 2010-2011 b (Percentages)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.

a The percentage of the population analysed is the same for both periods and corresponds to the poverty rate for 2008 or nearest

previous year.

b Corresponds to the period 2009-2011 in Brazil and Chile. c Urban areas.

Wages were the main driver of higher income in poor groups...

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.

a Urban areas.

LATIN AMERICA (18 COUNTRIES): FEMININITY INDEX OF POVERTY, 2011

… but gaps between women and men have been widening, leading to greater feminization

• f poverty

Social public spending has kept rising as precentage of GDP

Fuente: Comisión Económica para América Latina y el Caribe (CEPAL), sobre la base de cifras oficiales.

11.3 3.1 2.7 4.4 1.2 17.9 4.9 3.7 7.9 1.6 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 Gasto social total Gasto en educación Gasto en salud Gasto en seguridad y asistencia social Gasto en vivienda y

• tros

AMÉRICA LATINA Y EL CARIBE (21 PAÍSES): EVOLUTION OF SOCIAL SPENDING IN DIFFERENT ECTORS, 1990-1991 A 2008-2009. (in percentage of GDP)

1990-1991 1994-1995 1998-1999

6.6 a/ 1.8 a/ 1.0 a/ 3.5 a/ 0.4 a/

Total social spending Spending in education Spending in health Spending in social protection Spending in housing and other

Balance, perspectives and challenges

In 2013, external demand will not be a source

• f dynamism
• European Union

– Solvency problems persist both in terms of public debt and in the

financial system, as well as insufficient external adjustment

– Low growth and a possible recession in 2013 – Institutional changes (fiscal union and a unified banking supervisor)

will take time

• United States:

– Liquidity will continue to expand – Labour, housing and banking solvency indicators suggest possibilities

• f increased growth in 2013

– There remains a risk of the fiscal cliff

• China

– Indicators suggest growth similar to or greater than that of 2012:

7.9% in 2013 compared to 7.7% in 2012

But a slight uptick in growth is predicted for the region (3.8%) in 2013

LATIN AMERICA AND THE CARIBBEAN: CONTRIBUTION TO REGIONAL GDP GROWTH BY COUNTRY , 2004 - 2013

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures. a/ Estimate b/ Projection

• 3%
• 2%
• 1%

0% 1% 2% 3% 4% 5% 6% 7%

2004 2005 2006 2007 2008 2009 2010 2011 2012/a 2013/b Brazil Argentina The Caribbean Mexico Central America Rest of South America Latin America and the Caribbean

LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH RATES, 2013a (Percentages)

With a recovery in some countries and a small slowdown in others

Source: Economic Commission for Latin America and the Caribbean (ECLAC).

a Projection

2.0 2.0 2.0 3.0 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.8 3.9 4.0 4.0 4.0 4.0 4.5 4.5 4.8 5.0 6.0 6.0 7.5 8.5 00 01 02 03 04 05 06 07 08 09

Venezuela (Bol. Rep. of) The Caribbean El Salvador Dominican Republic Argentina Guatemala Costa Rica Cuba Ecuador Honduras Mexico Latin America and the Caribbean Central America (9 countries) South America (10 countries) Brazil Uruguay Latin America Colombia Nicaragua Chile Bolivia (Plur. St. of) Haiti Peru Panama Paraguay

THE CARIBBEAN: GDP GROWTH RATES, 2013a (Percentage)

The Caribbean will also grow, at 2.0%, but vulnerabilities remain

Source: Economic Commission for Latin America and the Caribbean (ECLAC)

a Projection

0.1 1.0 1.2 1.5 1.7 1.8 1.9 2.0 2.3 2.4 2.5 3.0 3.8 4.7 4.9

.0 1.0 2.0 3.0 4.0 5.0 6.0

Jamaica Barbados Granada Saint Vincent and the Grenadines Dominica Saint Kitts and Nevis Saint Lucia The Caribbean Belize Antigua and Barbuda Trinidad and Tobago Bahamas Latin America and the Caribbean Suriname Guyana

In the short term

The role of domestic demand (national and intra- regional) should be strengthened and expanded, in

• rder to:
• Grow to achieve equality (through employment and

wages)

• Enhance investment dynamics
• Avoid internal macroeconomic disequilibria (inflation or

financial bubbles)

• And external disequilibria (increasing current account

deficits)

• In the Caribbean: ensure fiscal consolidation, but with

social protection

• Strengthen regional demand through intra-regional trade

Longer-term challenges: structural gaps to be closed

Inequality

For the first time in recent history there have been advances in combating inequality

Investment

Investment, at 23% of GDP, is insufficient for development

Productivity

Closing the external gap (with the technological frontier) and the internal gap (between sectors and actors)

Taxation

Regressive tax systems; weak non- contributory pillar

International linkages

Risk of “lock-in” of the export structure, with low value added and little investment in technology

Environ- mental sustainabi- lity

Move towards sustainable production and consumption patterns

• In order to move towards productive convergence, policymakers must look beyond the price boom: economic policies

based on a relevant, long-term, sustainable vision at the macroeconomic, productive and territorial levels.

• To take advantage of the opportunities provided by the international context, exports must have a higher value added

and knowledge content, with the focus on diversification of production, integration of sustainable production processes, re-evaluation of global and regional partnerships and strengthening open regionalism.

• Consensus on priorities and respective financing: a fiscal covenant with a redistributive impact – with access to

innovation, job security and internalization of externalities.

• New equation: State-market-society.

AMÉRICA LATINA Y EL CARIBE: ESTRUCTURA DE LAS EXPORTACIONES POR NIVEL DE INTENSIDAD TECNOLÓGICA, 1981-2010 a (En porcentajes del total)

Risk of lock-in based on static comparative advantages

LATIN AMERICA (18 COUNTRIES): STRUCTURAL HETEROGENEITY INDICATORS, AROUND 2009 (Percentages)

Productive structure and employment: concentrated in low-productivity sectors

Source: ECLAC, on the basis of R. Infante, “América Latina en el ‘umbral del desarrollo’. Un ejercicio de convergencia productiva”, Working Paper, No. 14, Santiago, Chile, June 2011, unpublished.

Access to financing for development for middle-income countries

• The focus on per capita income does not reflect

the broad and multi-faceted nature of the development process

• ECLAC proposes an alternative approach based
• n structural gaps must be adopted
• This implies:
• Focusing cooperation and financing towards

development, not only poverty reduction

• Re-thinking the role and integration of middle

income countries in the system of regional cooperation

• New political dialogue at the global and regional

levels

Strengthening the regional integration agenda

• Intraregional trade, development of value chains,

investment and infrastructure

• Harnessing strategic opportunities with Asia,

especially China

• Enhancing the regional financial architecture
• Closer regional cooperation to tackle global

challenges (global governance, financing for development, Rio+20, development agenda beyond 2015).

ECLAC’s proposal: structural change for equality

• Close economic and social gaps, both internal and

external

• Progress towards more knowledge-intensive activities
• Reduction of production and territorial heterogeneity
• Spread throughout the economic and social structure:
• Production and technology capabilities
• Ample job opportunities and quality employment
• Social protection with universal access
• Environmental sustainability in the context of the

technology revolution

• Strengthen the role of the State as a guarantor of rights

and driver of policies for sustainable economic and social development