Latin American economies to grow 3.7 per cent in 2012

Dec 21, 2011, 18:42 GMT

Santiago - The joint economies of Latin America and the Caribbean are set to grow 3.7 per cent next year despite the ongoing crisis in Europe and the United States, the UN's Economic Commission for Latin America and the Caribbean (ECLAC) said Wednesday.

Growth is to be driven by record levels of foreign direct investment and foreign exchange reserves and is set to be led by Panama, Peru, Ecuador, Argentina and Colombia, according to ECLAC Executive Secretary Alicia Barcena.

'However, if things get worse in Europe the impact will be very high,' Barcena warned.

She noted that 'a lost decade is on the horizon for Europe.'

Economic growth in Latin America and the Caribbean is to amount to 4.3 per cent this year, according to ECLAC. While unemployment in the region will stand at 6.8 per cent this year, it will rise to 6.6 per cent by next year.

Foreign direct investment in the region amounted to 130 billion dollars this year, ECLAC said, with 81 billion of those going to Brazil and a total of 23 billion going to Chile, Mexico and Peru.

The region's exports, in turn, amounted to almost 1.1 trillion dollars, with over half of that coming from Brazil and Mexico.

ECLAC is now encouraging 'intra-regional trade,' Barcena said.

The foreign exchange reserves of Latin America and the Caribbean, which amounted to 165 billion dollars in 2002, have now reached a record level of 760 billion dollars, with Brazil and Mexico playing a leading role.

'That obviously strengthens economies,' Barcena noted.

'The big issue is how to keep up the growth dynamics and keep fighting inequality in the region.'