Economic and social
overview 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
Poverty
GDP per capita
Source: ECLAC, on the basis of specia tabulations of household surveys
There has been a clear reduction in inequality
since 2002, and this continued in 2011
LATIN AMERICA (18 COUNTRIES): GINI COEFFICIENT, 2002-2011 AND 2010-2011
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
of 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.
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
of 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)
12
10.3
10
9.2
7.7
8
7.9
7.7
6.0
5.7
6
5.1
4.7
4.5
4.3
4.0
3.8
4
3.1
2.1
2.7
2.4
2.2
2
1.5
2.4
2.1
1.8
1.7
1.5
0.6
0.3
0
-0.7
-0.5
-2
2010
World
Euro area
2011
United States
Latin America and the Caribbean
2012 a/
Developing economies
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on UN/DESA.
a/ Estimate.
b/ Projection.
2013 b/
China
Japan
Regional GDP grew by 3.1% in 2012, above the global
average (2.2%)
LATIN AMERICA AND THE CARIBBEAN: CONTRIBUTION TO REGIONAL GDP
GROWTH BY COUNTRY, 2004 – 2012a
7%
Brazil
6%
5%
Argentina
4%
The Caribbean
3%
2%
Mexico
1%
Central America
0%
-1%
Rest of South America
-2%
2012
2011
2010
2009
2008
2007
2006
2005
2004
-3%
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
The majority of Latin America countries posted growth
above 3.1% in 2012
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH RATES, 2012a
(Percentages)
Panama
Peru
Chile
Venezuela (Bol. Rep. of)
Costa Rica
Bolivia (Plur. St. of)
Ecuador
Colombia
Central America (9 countries)
Nicaragua
Uruguay
Mexico
Dominican Republic
Honduras
Guatemala
Latin America
Latin America and the Caribbean
Cuba
South America (10 countries)
Haiti
Argentina
El Salvador
Brazil
The Caribbean
Paraguay
10.5
6.2
5.5
5.3
5.0
5.0
4.8
4.5
4.2
4.0
3.8
3.8
3.8
3.5
3.3
3.1
3.1
3.0
2.7
2.5
2.2
1.2
1.2
1.1
-1.8
-4
-2
0
2
4
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
a Estimate
6
8
10
12
Growth in the Caribbean increased from 0.4% in 2011
to 1.1% in 2012
THE CARIBBEAN: GDP GROWTH RATES, 2012a
(Percentages)
Belize
4.2
Guyana
3.8
Suriname
3.6
Latin America and the Caribbean
3.1
Bahamas
2.5
Dominica
1.6
Saint Vincent and the Grenadines
1.5
The Caribbean
1.1
Trinidad and Tobago
1.0
Antigua and Barbuda
0.9
Saint Lucia
0.9
Barbados
0.2
Granada
0.2
Jamaica
-0.2
Saint Kitts and Nevis
-0.8
-2
-1
0
1
2
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
a Estimate
3
4
5
Consumption continued to be the most important
driver of growth
LATIN AMERICA: CONTRIBUTION TO GDP GROWTH, 2008 – 2012a
(As a percentage of GDP)
10%
8%
6%
4%
2%
0%
-2%
Private Consumption
General Government Consumption
Investment
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
a Figures for 2012 correspond to estimations.
2012
2011
2010
2009
2008
-4%
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)
30%
25%
20%
15%
10%
5%
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
0%
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
LATIN AMERICA AND THE CARIBBEAN: FOREIGN DIRECT INVESTMENT INFLOWS, 2008 – 2012a
(In millions of dollars)
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
2008
2009
2010
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
a Figures for 2012 correspond to estimations.
2011
2012
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
Inflation slowed, with some exceptions
LATIN AMERICA AND THE CARIBBEAN: CONSUMER PRICE INDEX, Jan 2008 – Oct 2012
(Rate of change over twelve months)
16%
14%
12%
10%
8%
6%
4%
2%
0%
2009
2010
CPI
2011
Food
2012
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)
60%
13,772
50%
9,326
40%
62,212
13,120
30%
751
377,753
1,400
20%
45,274
10%
5,366 6,804
36,402
38,943
1,856 4,838
1,990
165,590
2,524
25,864
3,347
0%
October 2011
October 2012
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
Some decline in commodity prices, but with increased
volatility
INTERNATIONAL PRICE INDICES OF COMMODITIES AND MANUFACTURES, 2008-2012
(2005=100, three month moving average)
Food
Oils and oilseeds
Minerals and metals
Manufactured goods
Tropical beverages
Forestry and agricultural raw materials
Energy
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).
Oct-12
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
360
340
320
300
280
260
240
220
200
180
160
140
120
100
80
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)
150
140
130
120
110
100
90
80
01-11-2012
01-09-2012
01-07-2012
Peru
01-05-2012
01-03-2012
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
01-01-2012
Mexico
01-11-2011
01-09-2011
01-07-2011
01-05-2011
01-03-2011
Colombia
01-01-2011
01-11-2010
01-09-2010
01-07-2010
01-05-2010
01-03-2010
Chile
01-01-2010
01-11-2009
01-09-2009
01-07-2009
01-05-2009
01-03-2009
01-01-2009
01-11-2008
01-09-2008
01-07-2008
01-05-2008
01-03-2008
01-01-2008
Brazil
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)
250,000
200,000
150,000
100,000
50,000
0
-50,000
-100,000
-150,000
-200,000
2008
2009
Portfolio investment outflows
Other investment outflows
Net financial flows (excl. net FDI and errors)
2010
2011
Portfolio investment inflows
Other investment inflows
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
a Figures for 2012 correspond to estimations.
2012
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
Saint Kitts and Nevis
Jamaica
Barbados
Granada
Antigua and Barbuda
Guyana
Dominica
Belize
Saint Lucia
Saint Vincent and the Grenadines
Bahamas
Brazil
El Salvador
Uruguay
Colombia
Argentina
Panama
Costa Rica
Trinidad and Tobago
Mexico
Bolivia
Nicaragua
Latin America (19)
Dominican Republic
Honduras
Venezuela
Haiti
Guatemala
Suriname
Ecuador
Chile
Peru
Paraguay
0
20
40
60
2012
80
100
120
140
160
2011
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.
The rise in consumption reflected improved labour
market conditions: unemployment fell (to 6.4%) and
wages increased
12.00
120.00
10.00
115.00
8.00
110.00
6.00
105.00
4.00
100.00
2.00
95.00
.00
90.00
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011 2012 e/
-2.00
85.00
-4.00
80.00
Economic Growth
Unemployment Rate (left axis)
Source: Economic Commission for Latin America and the Caribbean, (ECLAC), based on official figures.
e/ Estimate.
Real Average Wages (right axis)
Real Average Salary (Index 2000 = 100)
Rates (percentages)
LATIN AMERICA AND THE CARIBBEAN: ECONOMIC GROWTH, INCREASE IN REAL
AVERAGE WAGE AND VARIATION IN THE UNEMPLOYMENT RATE
Evolution of unemployment by sub-region
URBAN UNEMPLOYMENT RATE, 2008 - 2012
(Percentage)
10
9
REST OF SOUTH AMERICA
8
BRAZIL
7
CARIBBEAN
6
CENTRAL AMERICA
5
MEXICO
4
2008
Brazil
2009
Rest of South America (7 countries)
2010
Mexico
2011
Central America (3 countries)
Source: Economic Commission for Latin America and the Caribbean, (ECLAC), based on official figures.
e/ Estimate. For the Caribbean: First half of the year.
2012 e/
The Caribbean (3 countries)
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)
6
5
4
3
2
1
0
-1
-2
Salaried Employment
Own Account Workers
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
a/ January-September
GDP
Formal employment increased, but in various
countries at a slower pace
LATIN AMERICA: YEAR-ON-YEAR CHANGE OF FORMAL, SALARIED EMPLOYMENT
(Percentage)
9
7
5
3
1
-1
-3
-5
Argentina
Brazil
Chile
Costa Rica
2009
Mexico
2010
2011
Nicaragua
Panama
Peru
Uruguay
2012 a/
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.
Both poverty and indigence posted
a fresh decline in 2011
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.
Wages were the main driver of higher
income in poor groups...
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.
… but gaps between women and men have
been widening, leading to greater feminization
of poverty
LATIN AMERICA (18 COUNTRIES): FEMININITY INDEX OF POVERTY, 2011
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.
Social public spending has kept rising as
precentage of GDP
AMÉRICA LATINA Y EL CARIBE (21 PAÍSES): EVOLUTION OF SOCIAL
SPENDING IN DIFFERENT ECTORS, 1990-1991 A 2008-2009.
(in percentage of GDP)
6.6 a/
20.0
17.9
18.0
16.0
14.0
12.0
3.5 a/
11.3
10.0
1.8 a/
7.9
8.0
1.0 a/
6.0
4.9
4.0
4.4
0.4 a/
3.7
3.1
2.7
2.0
1.2
1.6
0.0
Gasto
Total social
socialtotal
spending
Gasto
en educación
Spending
in
education
1990-1991
Gasto
en salud
Spending
in
health
Gasto
en seguridad
Spending
in socialy
asistencia
social
protection
1994-1995
Fuente: Comisión Económica para América Latina y el Caribe (CEPAL), sobre la base de cifras oficiales.
1998-1999
Gasto
en vivienda
Spending
in y
otros
housing and other
Balance, perspectives and
challenges
In 2013, external demand will not be a source
of 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
of 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
7%
Brazil
6%
5%
Argentina
4%
The Caribbean
3%
2%
Mexico
1%
0%
Central America
-1%
Rest of South America
-2%
2013/b
2012/a
2011
2010
2009
2008
2007
2006
2005
2004
-3%
Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.
a/ Estimate
b/ Projection
Latin America and the
Caribbean
With a recovery in some countries and a
small slowdown in others
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH RATES, 2013a
(Percentages)
Paraguay
Panama
Peru
Haiti
Bolivia (Plur. St. of)
Chile
Nicaragua
Colombia
Latin America
Uruguay
Brazil
South America (10 countries)
Central America (9 countries)
Latin America and the Caribbean
Mexico
Honduras
Ecuador
Cuba
Costa Rica
Guatemala
Argentina
Dominican Republic
El Salvador
The Caribbean
Venezuela (Bol. Rep. of)
8.5
7.5
6.0
6.0
5.0
4.8
4.5
4.5
4.0
4.0
4.0
4.0
3.9
3.8
3.5
3.5
3.5
3.5
3.5
3.5
3.5
3.0
2.0
2.0
2.0
00
01
02
03
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
a Projection
04
05
06
07
08
09
The Caribbean will also grow, at 2.0%,
but vulnerabilities remain
THE CARIBBEAN: GDP GROWTH RATES, 2013a
(Percentage)
Guyana
4.9
Suriname
4.7
Latin America and the Caribbean
3.8
Bahamas
3.0
Trinidad and Tobago
2.5
Antigua and Barbuda
2.4
Belize
2.3
The Caribbean
2.0
Saint Lucia
1.9
Saint Kitts and Nevis
1.8
Dominica
1.7
Saint Vincent and the Grenadines
1.5
Granada
1.2
Barbados
1.0
Jamaica
0.1
.0
1.0
Source: Economic Commission for Latin America and the Caribbean (ECLAC)
a Projection
2.0
3.0
4.0
5.0
6.0
In the short term
The role of domestic demand (national and intraregional) should be strengthened and expanded, in
order 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
Investment
Productivity
Taxation
For the first time in
recent history
there have been
advances in
combating
inequality
Investment, at
23% of GDP, is
insufficient for
development
Closing the external
gap (with the
technological
frontier) and the
internal gap
(between sectors
and actors)
Regressive
tax systems;
weak noncontributory
pillar
International
linkages
Risk of “lock-in” of
the export structure,
with low value added
and little investment
in technology
Environmental
sustainability
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.
Risk of lock-in based on static comparative
advantages
AMÉRICA LATINA Y EL CARIBE: ESTRUCTURA DE LAS EXPORTACIONES POR NIVEL DE INTENSIDAD
TECNOLÓGICA, 1981-2010 a
(En porcentajes del total)
Productive structure and employment:
concentrated in low-productivity sectors
LATIN AMERICA (18 COUNTRIES): STRUCTURAL HETEROGENEITY INDICATORS, AROUND 2009
(Percentages)
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
on 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