A Bumpy Road Ahead

Latin America has enjoyed strong GDP growth in the past decade. The region grew 4% a year, almost twice the rate it recorded in the 1980s and 1990s. The strong growth, however, masks important differences within the region. The net commodity exporters -- that is, the South American countries, which...

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Bibliographic Details
Published in:Finance & Development 2013-09, Vol.50 (3), p.34
Main Authors: Sosa, Sebastián, Tsounta, Evridiki
Format: Article
Language:English
Subjects:
Capital stock
Commodities
Economic conditions
Economic growth
Economic reform
Employment
Exports
GDP
Gross Domestic Product
Informal economy
International finance
Labor productivity
Prices
Securities markets
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Summary:Latin America has enjoyed strong GDP growth in the past decade. The region grew 4% a year, almost twice the rate it recorded in the 1980s and 1990s. The strong growth, however, masks important differences within the region. The net commodity exporters -- that is, the South American countries, which exhibited increasing commodity dependence and an export base highly concentrated in primary goods -- have grown, on average, 4.5% a year since 2003. But the rest of the region -- Mexico, Central America, and the Caribbean -- was much less buoyant, growing only about 2.5% a year. While growth in non-commodity exporters was similar to that in commodity exporters in previous decades, non-commodity exporters underperformed in the last decade. There are several reasons for the disparity. The Latin American and Caribbean countries could improve their growth potential by increasing domestic savings -- and, in turn, investment levels, which remain low by international standards. Domestic saving rates in Latin America are less than 20% of GDP, compared with more than 40% in emerging Asia.
ISSN:0015-1947
1564-5142