Latin America and the Caribbean will enjoy a fourth consecutive year of economic growth in 2006, reports a UN economic commission for the region.

In a July 25 statement, the UN Economic Commission for Latin America and the Caribbean (ECLAC) said the region's gross domestic product (GDP) will grow by about five per cent in 2006.

The forecast was made in ECLAC's new report issued called Economic Survey of Latin America and the Caribbean, 2005-2006. In 2007, the region's GDP is predicted to be 4.5 per cent, which ECLAC said will be within the context of a moderate slowdown in the world economy.

ECLAC said the present economic expansion is spread across Latin America and the Caribbean, ranging between 3.5 per cent and 6.5 per cent for most countries of the region. The exceptions are Argentina, the Dominican Republic and Venezuela, with growth rates of over 7.5 per cent, while in Haiti the growth rate will be at about 2.5 per cent.

ECLAC said that Caribbean nations are expected to grow in 2006 by 6.3 per cent, South America by 5.4 per cent, and Mexico and Central America by 4.1 per cent.

In an earlier report released in April, ECLAC had estimated that growth in the United States in 2006 would be slightly below the 3.5 per cent rate achieved in 2005, probably approaching three per cent.

ECLAC also has said that the implementation of the US free trade agreement with Central America and the Dominican Republic (CAFTA-DR) will significantly increase the rate of investment in the Latin America region.

The region's unemployment rate fell to 9.1 per cent at the end of 2005 and remained under nine per cent over the first part of 2006. While the unemployment rate is at its lowest since the mid-1990s, 18 million people in the Latin America/Caribbean region are jobless.

Keeping inflation under control (at 6.1 per cent in 2005) remained a concern for most central banks in Latin America and the Caribbean. ECLAC said that "despite rising international oil prices, appreciation of almost all national currencies in the region has helped rein in the pace of price increases".

In contrast to previous cycles of growth, the region's governments have avoided "expansionary fiscal policies, opting to build up primary surpluses and pay down debt," said ECLAC. The economic commission added that the "current phase is noteworthy for the decreasing dependence of regional countries on external saving and the greater speed with which they are reducing their debt."

ECLAC said steady expansion of the world economy and "abundant liquidity on international capital markets" has helped bring about increased exports and better terms of trade for South America, Mexico, and Trinidad and Tobago.
Another factor said to be helping the economies of the region are money transfers (remittances) sent by emigrant workers to their native countries.

ECLAC said factors that could dampen economic growth in Latin America and the Caribbean include "greater volatility of markets facing fears of increased inflation," and the "latent risk of a sharp adjustment of global imbalances and rising oil prices". An additional factor is the concern generated by escalating warfare in the Middle East.

Nonetheless, the economic performance and macroeconomic policies in Latin America and the Caribbean over recent years provide for a "safety margin" in the "event of changes in external conditions, provided these are moderate," the economic commission said.

Trousers in Denim

Cream of the 'Crop'

Cheeky's World