Summary
Gross domestic product (GDP) growth in Latin America and the Caribbean stood at 4.2 per cent in 2008, which was the sixth consecutive year of expansion, yet at the same time marking the end of a period which has very few precedents in the economic history of the region.
The projected growth rate for 2009 points to an increase in the regional unemployment rate, from an estimated 7.5 per cent in 2008 to as much as 8.6 per cent in 2009. Trends in the world prices of foodstuffs and fuels, however, are likely to bring
about a marked fall in inflation, from 8.3 per cent in 2008 to 5.5-6 per cent in 2009.
What started out as a problem in the subprime mortgage market in the United States of America in mid-2007 became, just over a year later, a systemic crisis that crippled the credit markets of the developed countries and is already having an extremely negative impact on the real economy. Although the region is better prepared to face this crisis than previous ones, there are a number of channels through which the economies are being affected. First, the slowdown in the world economy is lowering the volume and prices of the region’s exports, bringing down remittances and cutting foreign direct investment and demand for tourism services. The countries are also faced with more difficult access to external credit, the cost of
which has increased.
In 2009, growth in Latin America and the Caribbean is expected to fall to a growth
rate of -0.3 per cent. The Governments of the region should make every effort to deploy countercyclical policies in order to ward off an even sharper economic decline.
Source: United Nations
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