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Latin American economy enters recovery phase |
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15:04, August 26, 2009 |
Latin American economy has entered a phase of recovery as a whole. Brazil, Chile, Colombia, Mexico and Peru have all begun their economic recovery. Except for Mexico, the prosperity index of four other nations in the region will further improve in the next six months.
Martin Redrado, Governor of the Central Bank of Argentina, said on Sunday, August 23 that the economy in the entire Latin American region is quite hopeful for a vigorous recovery, as a stable fiscal policy has been implemented in Latin American countries during the financial crisis.
Brazilian economy, a "bright spot" amid the global financial crisis, is definitely showing signs of resilience. Last year, Brazil's economy grew 5.1 percent despite impacts of the global financial crisis, and it had a tough economic time early this year. The Brazilian government, however, introduced a package of measures to prop up the real estate and automobile industries, in an effort to promote employment and increase the domestic demand.
Thanks to an initiating guidance by the government, domestic demand in Brazil has gradually been turned into a driving force for economic recovery, and its economy has shown signs of strong recovery since the start of the second half year of 2009.
With a growing confidence by the industry and foreign investor, President Luis Ignacio Lula da Silva said at an event in Brasilia: "Brazil has proven it can govern itself and keep the economy on track in very difficult time." Brazilian Finance Minister Guido Mantega on Monday expressed optimism on his country's economic future, saying that "Brazil recovered quicker from the global financial crisis than many other countries".
Meanwhile, signs of broad daylight have also appeared in Mexico, which has been seriously affected by the global financial crisis. Despite the announcement of a statistical department last Thursday that Mexican economy shrank by 10.3 percent between April and June, the biggest-ever decline in 25 years, as the global downturn hit the demand for exports and swine flu drove tourist number down. The relevant figures, however, show that that Mexican economy, after seasonal adjustments, fell 1.1 percent in the second quarter than in the first quarter, far less than 5.9 percent year-on-year in the first quarter.
Mexican economy will begin to pick up in the third and fourth quarter of the fiscal 2009, said Governor Guillermo Ortiz of Mexican central bank.
In spite of the scenario for a rebound of Latin American economy, there are still some undefined factors. First, the economy of Latin American countries highly relies on the economies of the United States and the European Union (EU). And with a rising unemployment and growing poverty population, the consuming and purchasing powers of Latin Americans have slid down. As a main source of foreign exchange reserve for their economies, the remittance by their nationals residing abroad had shrunk by a big margin.
Second, uncertainty over influenza A/H1N1 outbreak has cast a shadow over early signs of an economic recovery in the region. Moreover, influenza A (H1N1) has weakened the effort for lessening the dependence of Latin America nations on the Europe and the U.S., and made its cooperation with the Asia/Pacific and the Southeast Asia region less ideal as expected, and this inflicted a direct impact upon the region's export trade.
At present, Latin American nations are working actively to explore markets beyond the Europe and the U.S. and to expand bilateral economic and trade ties with China and other developing nations in a bid to turn the crisis into opportunities.
During his recent visit to Brazil, Mexican President Felip Calderon cited the trade multilateralism as the best and most ideal policy to cope with financial crisis, and he underscores that China, India, Brazil and other developing economies have a huge potential to tap. With the improvement of global financial environment, he said, there will a gradual upturn of the prices for their commodities, and Latin American nations are likely to resume their export trade.
Overall, economic recovery in Latin America is determined by an economic trend in the developed economies to some extent, and the region's both exports and economy would resume thoroughly only when the developed countries rid themselves of an impact from the financial crisis and proceed to expand their domestic demand.
Global economy will bottom out in the second half of 2009, wrote Nouriel Roubini, who has credited with the prediction of the financial crisis, in a Financial Times commentary. "The US economy will not recover until the end of this year, and even then growth will remain meek and vulnerable to higher interest rates and commodity prices," the ace economist Nouriel Roubini said on Tuesday, August 24.
"That recovery will continue slowly, slowly over time," Professor Roubini said. This is, beyond any doubt, the encouraging news for Latin American nations, whose economy has begun to recover.
By People's Daily Online
http://paper.people.com.cn/rmrb/html/2009-08/26/content_327745.htm
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