Presentation to EPI - Washington Antonio Prado Deputy Executive - - PowerPoint PPT Presentation

Presentation to EPI - Washington

19 May 2010

Antonio Prado

Deputy Executive Secretary

Economic Commission for Latin America and the Caribbean

The magnitude of the global crisis led to a contraction

• f GDP not seen in the 1980s in the region …

LATIN AMERICA AND THE CARIBBEAN : GDP GROWTH (Percentages)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Economic Outlook, IMF, October 2009

• 4
• 2

2 4 6 8

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

Growth Trend Debt Asian- Russian Savings and loans Tequila Argentine Current

The growth rate fell more steeply than it had in other crises

LATIN AMERICA AND THE CARIBBEAN : GROWTH RATES BEFORE AND DURING CRISIS EPISODES (Average growth rates before and during the crisis) Pre‐crisis averages correspond to:

• Tequila: 1990‐1993
• Asian‐Russian: 1996‐1997
• Argentine: 2000‐2001
• Current: 2003‐2007

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Economic Outlook, IMF, October 2009

Latin America and the Caribbean

2.7 4.6 2.2 5 0.5 0.4

• 1.8
• 0.4
• 3
• 2
• 1

1 2 3 4 5 6

Tequila Asian-Russian Argentine Current

Pre-crisis average Growth during the crisis

South America

3.7 4.2 1.5 5.8 4.0

• 2.3

0.1

• 1.2
• 3
• 2
• 1

1 2 3 4 5 6 7 Tequila Asian-Russian Argentine Current

Pre-crisis average Growth during the crisis Mexico and Central America

3.5 4.5 2.5 4.7 1.6 4.2

• 1.0

2.5

• 2
• 1

1 2 3 4 5 Tequila Asian-Russian Argentine Current

Pre-crisis average Growth during the crisis

• 1.9

The effects of financial crises are associated with deteriorating external conditions

• Tightening of external financing

– Sudden stops – The tightening of external financing has translated into a domestic credit crunch

• Interruption of trade flows

– Fall in exports

The international crisis shifted the dynamics

• f financial flows into the region…
• 3%
• 2%
• 2%
• 1%
• 1%

0% 1% 1% I-2007 II-2007 III-2007 IV-2007 I-2008 II-2008 III-2008 IV-2008 I-2009 II-2009 III-2009 IV-2009

Net financial flows (Percentages of GDP)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information. Note: Simple average, includes Argentina, Brazil, Chile, Colombia, Mexico and Peru. Does not include FDI.

Net financial inflows and outflows (Percentages of GDP)

• 3%
• 2%
• 1%

0% 1% 2% 3% 4% 5% I-2007 II-2007 III-2007 IV-2007 I-2008 II-2008 III-2008 IV-2008 I-2009 II-2009 III-2009 IV-2009

Inflows Outflows

Remittances also decreased…

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information.

LATIN AMERICA AND THE CARIBBEAN : REMITTANCES (QUARTERLY DATA) (Annualized growth rates)

• 30%
• 20%
• 10%

0% 10% 20% 30% 40% 1Q 2007 2Q 2007 3Q 2007 4Q 2007 1Q 2008 2Q 2008 3Q 2008 4Q 2008 1Q 2009 2Q 2009 3Q 2009 Guatemala El Salvador Mexico Nicaragua Dominican Rep. Ecuador Colombia Jamaica

And the crisis has also damaged the region’s trade flows…

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information. Note: Simple average; includes Argentina, Brazil, Chile, Colombia, Mexico and Peru.

LATIN AMERICA AND THE CARIBBEAN (SIX COUNTRIES): EXPORTS AND IMPORTS (Percentage annual variation in total value)

• 50%
• 40%
• 30%
• 20%
• 10%

0% 10% 20% 30% 40% 50% 60% Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

Exports Imports

At the same time, the domestic credit growth slowed heavily in Latin America…

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information. Note: Simple average; includes Argentina, Brazil, Chile, Colombia, Mexico and Peru.

LATIN AMERICA AND THE CARIBBEAN (6 COUNTRIES): CREDIT TO THE PRIVATE SECTOR (Percentage annual variation, in real terms)

0% 5% 10% 15% 20% 25% Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

Despite the difference with respect to other crises, this episode does not seem to have compromised growth in stocks…

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information.

LATIN AMERICA AND THE CARIBBEAN (7 COUNTIRES): MONTHS OF IMPORTS COVERED WITH INTERNATIONAL RESERVES AND EXTERNAL DEBT AS A PERCENTAGE OF GDP, 1980-2009

5 10 15 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 Years Months of import cover with international reserves 20 30 40 50 60 70 80 External debt as a percentage of GDP

IR/Imports External dbt/GDP

External debt Asia Argentina

This is partly thanks to macroeconomic achievements prior to the crisis …

• Macroeconomic performance was

exceptional in 2003-2007:

– Highest per capita growth rates for the past three decades, 3.7%

• Average rate in the 1970s was 3.1%

– Macroeconomic stability

• Non-financial public sector debt fell from 59%
• f GDP to 33%

– Large build-up of international reserves

• Level of reserves more than doubled, from US$

189 billion in 2003 to US$ 433 billion in 2007

And helped to underpin countercyclical policies in the region…

• Most of the countries announced fiscal

stimulus packages

– These vary from 1% to 6% of GDP – Most packages are directed at increasing spending

• On expanding and maintaining infrastructure
• On social sectors
• On support for SMEs
• On job creation

– They also include tax policies (tax cuts) to stimulate private spending on consumption and investment

• Cuts in direct and indirect taxes and increased

exemptions

• Cuts in social security contributions
• Fuel prices freezes or cuts

On the monetary front the countries reduced their interest rates…

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information.

LATIN AMERICA: MONETARY POLICY RTES IN COUNTRIES WITH INFLATION TARGETS, JANUARY 2007-MARCH 2010

2 4 6 8 10 12 14 16 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Brazil Colombia Mexico Chile Peru

Lastly, public-sector credit was boosted to compensate for the fall in private lending…

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of IDB (2010).

LATIN AMERICA AND THE CARIBBEAN (7 COUNTRIES): GROWTH IN TOTAL LENDING (IN REAL TERMS), 2007-2009

26% 28% 7% 17% 16% 19% 4%

• 4%

22%

• 5

5 10 15 20 25 30 2007 2008 2009

Total lending Private lending Public lending

The countercyclical role of the public financial systems was particularly significant in Brazil…

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Bacen (2010).

BRAZIL: INDEX OF CREDIT TO GDP OF PUBLIC AND PRIVATE FINANCIAL INSTITUTIONS AND INDUSTRIAL ACTIVITY INDEX, JANUARY 2008-OCTOBER 2009

75 85 95 105 115 125 135 145 155 165 175 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Public financial institutions Private financial institutions Activity index

Index: January 2008=100

January-December 2008 January-October 2009

This paved the way for an upturn in economic activity…

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information. Note: Simple average, includes Argentina, the Bolivarian Republic of Venezuela, Brazil, Chile, Colombia, Mexico and Peru.

LATIN AMERICA: INDUSTRIAL PRODUCTION (Percentage annual variation)

• 15%
• 10%
• 5%

0% 5% 10% 15% Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

Crisis Recovery

The recovery will firm up in 2010 with growth estimated at 4.1%

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information.

LATIN AMERICA AND THE CARIBBEAN: GROWTH RATES, 2010 (Percentages)

1.5 1.8 2.0 2.0 2.0 2.0 3.0 3.0 3.0 3.0 3.5 3.5 3.5 4.1 4.5 4.5 4.5 5.0 5.0 5.5 4.0 4.5 2.5 2.0 1 2 3 4 5 6 Honduras The Caribbean El Salvador Guatemala Haiti Nicaragua Venezuela (Bol. Rep. of) Colombia Central America Cuba Ecuador Paraguay Costa Rica Mexico Dominican Republic Argentina Latin America and the Caribbean South America Bolivia (Plur. State of) Chile Panama Peru Uruguay Brazil

Widespread recovery in the region…

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information.

LATIN AMERICA: GDP GROWTH RATES IN REAL TERMS, 2009 AND 2010 (Percentages)

• 8
• 6
• 4
• 2

2 4 6 8 Mexico Paraguay Honduras El Salvador Venezuela (Bol.

• Rep. of)

Chile Nicaragua Costa Rica Guatemala Ecuador Brazil Colombia Argentina Peru Uruguay Dominican Rep. Panama Bolivia (Plur. State

• f)

2009 2010

LABOUR MARKET AND VULNERABILITY TO THE CRISIS

The crisis adversely affected the labour market and reversed some of the gains made in recent years

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information.

LATIN AMERICA AND THE CARIBBEAN: RATES OF EMPLOYMENT AND UNEMPLOYMENT, 1990-2009 (Percentages)

50 51 52 53 54 55 56 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 e 6 7 8 9 10 11 12

Employment rate (left axis) Unemployment rate (right axis)

The fall in the participation rate contained the rise in unemployment, which reached around 8.3% in 2009

The social impacts of the crisis have also been severe, as shown by the rise in unemployment and poverty…

LATIN AMERICA AND THE CARIBBEAN: POVERTY, EXTREME POVERTY AND UNEMPLOYMENT RATE a (Percentages)

13.7 18.6 22.5 19.0 18.5 19.4 13.3 12.6 12.9 34.1 40.5 48.3 43.5 43.8 44.0 36.3 34.1 33.0 10 20 30 40 50 60

1980 1990 1997 1999 2002 2006 2007 2008 2009 b

2 4 6 8 10 12 Indigence Poverty Unemployment rate (right axis) Source: Economic Commission for LAC (ECLAC), on the basis of household surveys.

a The numbers of poor and indigent are based on estimates for 19 countries of the region, including Haiti. b The figures for 2008 and 2009 are estimates.

Slower inflation helped to protect workers’ real income

LATIN AMERICA: NOMINAL WAGES, INFLATION AND REAL WAGES a (Percentages)

13.2

10.4

13.0 5.8 2 4 6

8 10 12

Variation in nominal wage

2008 2009

Inflation

Growth in real wages: 4.5% Source: Economic Commission for Latin America and the Caribbean (ELCAC), on the basis of official figures.

a Simple average for 10 countries.

This helped to mitigate the impact on poverty

Public spending —both current and capital— rose

LATIN AMERICA AND THE CARIBBEAN (SELECTED COUNTRIES): YEAR-ON-YEAR VARIATION IN PUBLIC SPENDING, FIRST NINE MONTHS OF 2009 (Percentages of GDP)

Source: Economic Commission for Latin America and the Caribbean (ELCAC), on the basis of official figures.

a Semester data.

1.9 0.6 2.4 1.4 0.9 0.6 1.8 0.8 0.6 0.8 0.6 1.1 0.4 0.6 1.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Argentina Brazil Chile Colombia

a

Ecuador Mexico Peru Uruguay

Current spending Capital spending

EXPECTATIONS IN VIEW OF THE CRISIS

It is still uncertain whether the region can look forward to sustained growth in the medium term…

• The effects of this crisis are not limited to

temporary factors of the business cycle:

– The magnitude and systemic nature of the crisis suggest that more structural changes will take place on the global scene – There is a growing perception that global dynamics will shift towards a “new normal”, which will have three main features:

• Lower actual and potential growth rates in

developing economies

• Less expansion in international financial markets
• Smaller trade flows

In the developed countries, potential GDP will be lower and will grow more slowly in the medium term…

Source: Economic Commission for Latin America and the Caribbean (ELCAC), on the basis of OECD (2009) and the European Commission (2009).

135 145 155 165 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pre-crisis Crisis Post-crisis Potential GDP (2.3%) Scenario I (2.3%) S c e n a r i

• I

I ( 1 %

• 1

. 5 % )

It will not be easy to recover pre-crisis global growth rates in the medium term…

• Aggregate demand has to be rebalanced between
• countries. But consensus and clarity on how to

achieve this are lacking

– The developed countries account for much of world consumption

• United States 34% and OECD 84% of global

consumption on average for 2004-2007

– Emerging economies (Asia-China) have room to increase domestic demand, but face major internal constraints

• Public and private domestic demand need to be

rebalanced

– It will be hard to maintain fiscal stimuli – It is not clear how to replace public spending with private spending

The financial and trade landscape will also be different in the post-crisis world…

• It will take time to remedy disfunctional financial

systems

– Smaller financial flows to developing regions – Domestic bias and financial protectionism – Changes in financial regulation

• On the trade front:

– Prolonged slowdown in import demand from developed economies: slower growth in world trade

• Greater reliance on protectionist practices
• Slow pace of recovery in credit and settlements

systems

• Disruption of global production chains

– Trade will continue to provide opportunities for growth

The implications of this new context vary widely within Latin America…

• The effects will be greater in economies that have:

– Strong dependence on developed countries for trade and financial flows, less developed financial systems, limited access to international financial markets and little capacity to substitute external demand with domestic demand

• Countries that export raw materials may benefit

depending on:

– The depth of South-South trade – The evolution of demand from emerging economies and commodity export prices

To achieve sustainable growth in this new context, the region must deal with four major shortfalls

• Productivity and investment
• Education
• Inequality and social protection
• Climate change

This will require…

• Redefinition of the role of the State and of public

policies:

– Macro policies conducive to productive development – Investment promotion – Knowledge- and innovation-driven increase in competitiveness – Stronger social policies and institutions – Sustainable use of natural resources and environmental stewardship

• A

new political covenant for democratic governance

THE IMPACT OF THE CRISIS ON POVERTY AND VULNERABILITY

RECENT PAST

After the lost decade of the 1980s came the difficult 1990s and the achievements of the new century

40.5 48.3 44.3 33

1 9 8 1 9 8 2 1 9 8 4 1 9 8 6 1 9 8 8 1 9 9 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 2 2 2 4 2 6 2 8 30 32 34 36 38 40 42 44 46 48 50 Poverty rate

The lost decade The difficult '90s Substantive achievements

Four allies contributed to the drop in poverty between 1990 and 2008, to different extents in different periods …

• Economic

growth (the 1990s, with higher employment rates, and starting in 2002, with both higher employment and higher income)

• Distributive improvements (only 2002-2008)
• Strong expansion in social spending (begins rising

again in 1990s and consolidates between 2002 and 2008)

• Demographic effect (lower rates of fertility and

dependency and smaller average households, more pronounced in the first stage than in the second)

Unlike in the 1990s, between 2002 and 2008 there was a SECOND ALLY: income distribution inequality decreased significantly…

LATIN AMERICA (18 COUNTRIES): GINI INDEX, AROUND 2002 AND 2008

BO NI EC MX UY CR VE SV PA AR PY BR CO RD GT CL PE HN Latin America 0.40 0.45 0.50 0.55 0.60 0.65 0.40 0.45 0.50 0.55 0.60 0.65 2002 2008 Countries in which inequality decreased Countries in which inequality increased

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.

Third ally: as well as GDP growth, social spending gained a higher priority within public spending

LATIN AMERICA (21 COUNTRIES): SOCIAL PUBLIC SPENDING AND TOTAL PUBLIC SPENDING IN RELATION TO GDP (Percentages)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), social spending database, on the basis of official information.

17.9 12.4 0.61 0.44 10 15 20 25 30 35 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0.3 0.4 0.5 0.6 0.7 0.8 0.9

SPS % of GDP weighted average TPS % of GDP weighted average Ratio SPS/TPS

• Poly. (Ratio SPS/TPS)

Total public spending Social public spending Fiscal priority of SPS

Fourth ally: between 1990 and 2010 the dependency rate was still falling sharply

Source: Economic Commission for Latin America and the Caribbean (ECLAC), Latin American and Caribbean Demographic Centre (CELADE)-Population Division of ECLAC.

50 60 70 80 90 100 1 9 5 1 9 6 1 9 7 1 9 8 1 9 9 2 2 1 2 2 2 3 2 4 2 5

Number of persons of non-working age per 100 persons of working age: (0-14) + (60 +) / (15-59)

Steep decline: Easy gains from dividend (1970-2010/2015) Stabilization at low levels: Dividend remains, but its effect depends on other factors (2010/2015-2021) Beginning of the end of the demographic dividend: Dependency rate begins to rise 2021-

THE IMPACT OF THE CRISIS ON POVERTY AND VULNERABILITY

The past the region must avoid repeating: social recovery that lags behind economic recovery

LATIN AMERICA AND THE CARIBBEAN (WEIGHTED AVERAGE FOR 19 COUNTRIES): PER CAPITA GDP AND POVERTY RATES, 1980-2008 (In dollars and percentage rate of the population)

3620 3432 3650 3321 3746 3886 4597 43.3 48.3 45.7 43.5 34.1 36.3 42.0 42.5 40.5 39.8 44.3 33.0 3 000 3 200 3 400 3 600 3 800 4 000 4 200 4 400 4 600 4 800 5 000 1 9 7 8 1 9 8 1 9 8 2 1 9 8 4 1 9 8 6 1 9 8 8 1 9 9 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 2 2 2 4 2 6 2 8 2 1

Per capita GDP

30 32 34 36 38 40 42 44 46 48 50 Poverty rate Per capita GDP Poverty Recovery of per capita GDP: 14 years Return to previous poverty level: 25 years Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys in the respective countries, for poverty data, and official information, for GDP data.

Social outlook 2009

• The global financial crisis will cause regional GDP

to fall by around 1.8% in 2009

• For the first time in six years, poverty levels will

stop falling and start to rise. The downward trend in extreme poverty has already been reversed by the spike in food prices in 2008

• ECLAC projects that between 2008 and 2009 the

proportion of poor people in the region will increase from 33% to 34.1% (by 1.1 percentage points). The indigent population is projected to increase from 12.9% to 13.7% (by 0.8 percentage points)

• In 2009 there will be 9 million more poor and 5

million more indigents than there were in 2008

In terms of regional averages, the downturn 2009 will not erase all the gains made previous six years, but it will halt reverse the positive trends

LATIN AMERICA AND THE CARIBBEAN: POVERTY AND EXTREME POVERTY a, 1980–2009 (In percentages and millions of people) Percentage of the population Millions of persons

18.6 22.5 18.5 19.4 13.3 12.6 12.9 13.7 40.5 48.3 43.8 44.0 36.3 34.1 33.0 34.1 10 20 30 40 50 60 1980 1990 1999 2002 2006 2007 2008 2009 Indigent Non-indigent poor 62 93 89 97 71 68 71 76 136 200 211 221 193 184 180 189 50 100 150 200 250 300 1980 1990 1999 2002 2006 2007 2008 2009 Indigent Non-indigent poor

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

a Estimates for 19 countries of the region, including Haiti. The figures above the bars represent the percentage and total number of poor (indigent plus

non-indigent poor), respectively.

Why the social impact has been smaller than in previous crises

• Three pieces of good news that set this crisis apart

from previous crises:

– no fiscal collapse of States – no inflation or hyperinflation – no collapse of financial systems

• Governments and multilateral agencies are able and

willing to support countercyclical monetary and fiscal

• measures. This contrasts sharply with the situation in

the 1980s

• The sustained increase in social spending and social

protection instruments has helped to mitigate the social effects of the crisis

• All this has helped to sustain higher levels of activity

and employment, protect the value of wages and maintain or expand social protection systems

The shifting boundaries of well-being: a large proportion of the population is at risk

LATIN AMERICA (18 COUNTRIES): PROFILE OF INCOME VULNERABILITY BY COUNTRY, 2008 (Percentages)

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

4.5 4.4 6.0 9.5 1 2.5 1 4.2 1 0.9 1 3.7 1 6.1 25.4 1 9.7 25.4 35.2 32.4 34.3 37.4 49.5 1 4.7 1 5.5 1 7.1 1 7.9 1 9.4 20.0 25.5 30.6 28.8 25.0 32.3 30.3 31 .6 26.4 31 .5 32.0 32.5 25.5 1 7.5 1 7.9 1 8.9 1 6.9 1 5.7 1 6.6 21 .7 20.2 20.0 1 6.6 1 9.4 1 6.4 1 8.3 1 4.7 1 4.6 1 5.0 1 3.9 1 1 .0 63.3 62.2 58.0 55.7 52.4 49.2 41 .9 35.5 35.1 32.9 28.6 28.2 24.7 23.7 21 .5 1 8.7 1 6.2 1 4.0 25.1 0% 1 0% 20% 30% 40% 50% 60% 70% 80% 90% 1 00%

U r u g u a y C h i l e C

• s

t a R i c a A r g e n t i n a B r a z i l P a n a m a V e n e z u e l a ( B

• l

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• f

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e r u D

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i n i c a n R e p . E c u a d

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C

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b i a E l S a l v a d

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B

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i v i a ( P l u r . S t a t e

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d u r a s

Indigent and highly vulnerable to indigence (up to 0.6 PL) Poor and highly vulnerable to poverty (0.61

• 1

.2 PL) Vulnerable to poverty (1 .2-1 .8 PL) Not vulnerable (over 1 .8 PL)

Women and children are still the most vulnerable to

• poverty. They increased as a proportion of the poor

population from 2002 to 2008

LATIN AMERICA (18 COUNTRIES): RATIO BETWEEN THE POVERTY RATE OF WOMEN AND CHILDREN AND THAT OF THE REST OF THE POPULATION, AROUND 2002 AND 2008 a Children between 0 and 14 years of age / Persons aged 14 and older Women / Men (aged 20 to 59)

1.0 1.5 2.0 2.5 3.0 Argentina b Bolivia c Brazil Chile Colombia Costa Rica Ecuador c El Salvador Honduras Mexico Nicaragua Panama c Paraguay b Peru Dominican Rep. Uruguay c Venezuela (Bol. Rep) 2002 2008 0.95 1.00 1.05 1.10 1.15 1.20 1.25 1.30 1.35 1.40 Argentina b Bolivia c Brazil Chile Colombia Costa Rica Ecuador c El Salvador Guatemala Honduras Mexico Nicaragua Panamá c a Paraguay b Peru Dominican Rep. Uruguay c Venezuela (Bol. Rep.) 2002 2008

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 Countries, in order of variation in annual poverty rate. The year 2002 corresponds to the most recent survey available between 2000 and 2002, and 2008

represents surveys available between 2004 and 2008.

b Metropolitan area. c Urban area.

New demands will arise as a result of the gradual aging of the care burden

LATIN AMERICA AND 4 SELECTED COUNTRIES: POPULATION IN NEED OF CARE PER 100 POTENTIAL CARERS, BY AGE GROUP, 2000-2050 (Percentages)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), Latin American and Caribbean Demographic Centre (CELADE)- Population Division of ECLAC, Population estimates and projections, 2008.

5 10 15 20 25 30 35 40 2000 2010 2020 2030 2040 2050 Children aged under 12 Persons aged 75 and over

6% 34% Cuba Chile Mexico Costa Rica

FUTURE SCENARIOS: THE CHALLENGE FOR SOCIAL PROTECTION SYSTEMS

The new conditions for combating poverty are not merely temporary: a steep road lies ahead

• Negative growth rates in 2009 and modest

growth in 2010

• In many countries, between 2010 and 2020

the easy stage of the demographic dividend will be over

• Countries’ fiscal capacity means that social

spending is unlikely to grow at rates similar to those seen from 1990 to 2008

• Distributive struggles will increase as the pie

grows slowly or not at all

Monetary transfers improve income of poorest sectors

LATIN AMERICA (18 COUNTRIES): SHARE OF THE POOREST 40% OF HOUSEHOLDS IN INCOME BEFORE AND AFTER TRANSFERS a, AROUND 2008 (Percentages) UY AR VN SV PE CR BR HN BO DO GT CO CL EC PA NI PY MX AL 6 7 8 9 10 11 12 13 14 15 16 6 8 10 12 14 16 Share in income before transfers (%) Share in income after transfers (%) .

Countries in which the share of the poorest 40% increases Countries in which the share of the poorest 40% decreases

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

a Income before transfers refers to the per capita income obtained by households through their participation in the labour market (primary income). The

households reported as low-income before transfers are not necessarily the same as those reported as low-income after transfers.

Some 190 million people are thought to be living in poverty in 2009, and 101 million of them are benefiting from CTPs. So there is still room for extending programmes and covering more families who are unable to meet their basic needs

LATIN AMERICA (17 COUNTRIES): COVERAGE OF CONDITIONAL TRANSFER PROGRAMMES, 2006/2009 a (Percentages of the poor and indigent population)

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

a Income before transfers refers to the per capita income obtained by households through their participation in the labour market (primary income). The

households reported as low-income before transfers are not necessarily the same as those reported as low-income after transfers.

93.4 84.3 63.7 55.7 51.9 38.7 36.4 34.7 28.1 7.7 4.6 83.9 83.3 71.2 54.7 51.7 36.0 41.6 41.1 22.2 35.3 17.4 21.2 18.5 14.5 19.2 4.0 2.4 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 E c u a d

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( 2 8 ) H

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d u r a s ( 2 8 ) N i c a r a g u a ( 2 6 ) P a r a g u a y ( 2 7 ) CTPbeneficiaries/indigen t andpoor popula tion Percentage indigent population Percentage poor population > 100 > 100 > 100 > 100 > 100 > 100

A broad range of social programmes were announced

LATIN AMERICA AND THE CARIBBEAN: COMPOSITION OF PORTFOLIO OF SOCIAL PROGRAMMES ANNOUNCED AFTER THE OUTBREAK OF THE CRISIS (Percentages)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), The reactions of the Governments of the Americas to the

international crisis: an overview of policy measures up to 30 September 2009 (LC/L.3025/Rev.5), Santiago, Chile, October 2009.

Support for poor families Consumption subsidies

25 50 50 75 50 50 10 20 30 40 50 60 70 80 90 100 South America and Mexico Central America The Caribbean

Measures taken in response to the crisis

Non-contributory cash transfers

Increase of coverage and amounts. Very widely adopted (17 countries)

Changes to social security: strengthening the pillars of solidarity and protection of retirement benefits

Partial use, almost exclusively in countries with more developed systems (5 countries)

Protection of labour income (minimum wage and wage replacement)

Wide use of minimum wage and unemployment insurance where available (8 countries)

Economic stimulus measures (credit and tax exemptions for SMEs, training)

SME measures widely used (12 countries); training to a lesser extent (5 countries)

Investment in and subsidies for housing

Very widely used (12 countries)

Investment in social services infrastructure (education and health)

Very widely used (13 countries)

Food

Widely used (9 countries). Relatively less developed countries prioritize food security

Subsidies on basic necessities

Widely used (18 countries)

As activity levels and world trade begin to pick up, commodity prices are beginning to rise

SELECTED COMMODITY PRICE INDEXES, 2000-2009 (2000=100)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of figures from UNCTAD and CPB (Netherlands

Bureau for Economic Policy Analysis).

50 100 150 200 250 300 350 400 450 500 Jan 2000 Apr 2000 Jul 2000 Oct 2000 Jan 2001 Apr 2001 Jul 2001 Oct 2001 Jan 2002 Apr 2002 Jul 2002 Oct 2002 Jan 2003 Apr 2003 Jul 2003 Oct 2003 Jan 2004 Apr 2004 Jul 2004 Oct 2004 Jan 2005 Apr 2005 Jul 2005 Oct 2005 Jan 2006 Apr 2006 Jul 2006 Oct 2006 Jan 2007 Apr 2007 Jul 2007 Oct 2007 Jan 2008 Apr 2008 Jul 2008 Oct 2008 Jan 2009 Apr 2009 Jul 2009 Oct 2009

Food Metals and minerals Oil

The region is regaining access to international financial markets

LATIN AMERICA AND THE CARIBBEAN: EMBIG AND EXTERNAL BOND ISSUES (Basis points and millions of dollars)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of figures from J.P.Morgan.

100 200 300 400 500 600 700 800 900

• 2

• v

• 2

• v

• 2

• v

• 2

• v

• s

2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000

• n

Sovereign Private Quasi-sovereign + supranational EMBIG composite for Latin America (left axis)

Thank You.