Latin America will grow in 2013 despite global crisis

The money in Latin Americans’ pockets made economic headlines this week thanks to a webcast on Latin America’s economic outlook for 2013. The event, in which experts reported that the region will grow 3.5% this year, was followed by nearly 5,000 people and was simultaneously broadcast on our website, América Economía and CNNExpansión.

Dozens of participants from all countries of the region asked questions. On social media, the hashtag #Perspectivas2013 became one of the most popular discussions in the region, reflecting Latin Americans’ interest in their countries’ economies given the context of the global crisis which has hit their Eurozone counterparts particularly hard.

On Twitter, @Datrusa (Daniel Trujillo) asked what countries should be doing to keep on the development path first recorded in the years prior to the 2008 crash. During his presentation,  World Bank Chief Economist for Latin America Augusto de la Torre, explained that the region will no longer benefit from previously favorable global economic winds. And so, to continue to prosper the region must focus on increasing domestic consumption and productivity based on a strong manufacturing sector, particularly in the service sector.

During the live chat,  many Paraguayans wanted to know about their country’s growth rate. And they will surely not be disappointed. According to the World Bank report, the Paraguayan economy will expand 11%, making it the country with the highest growth rate for 2013 in Latin America.  Panama follows with 9%, and Peru with 6%. Colombia will grow 4%, Mexico, 3.5%, Brazil, 3.1% and Argentina, 3%.

The Facebook discussion also provoked interesting comments, such as that of Bustamante: “I believe that Latin America has potential for sustainable growth since, in light of the high level of uncertainty in developed economies, emerging economies such as Peru, Colombia or Chile are attracting important foreign investment.”

According to a report presented during the webcast, most of the countries of the region will continue to depend on their natural resources and external capital in the short term to compensate for insufficient domestic savings.

Pedro Jesús Jiménes (Dominican Republic) and Marcial Apolo (Peru) brought up another topic which piqued audience interest: How can the region – besides growing – maintain and improve the social gains of recent years? During the event, De la Torre responded that in the future “reforms to increase productivity will be pivotal for growth and social progress in Latin America.”

“The future challenge for economic policy will be to preserve and strengthen past achievements, consolidating the returns of socially inclusive growth without the aid of favorable external winds,” he added.

On Twitter, @jpriale wanted to know how to stimulate domestic growth and what risks this would entail. According to De la Torre, the response to the question lies in first understanding the specific features of the growth pattern in Latin America, its limitations and strengths.

“Although there is much talk about Southeast Asia’s growth model (based on exporting manufactured goods, a high level of savings as well as a competitive exchange rates), the fact is that current circumstances in Latin America sharply contrast with this situation,” he explained.