While Latin America has come a long way in overcoming hyperinflation and the economic instability that characterized many of its economies in the past as well as chalked up respectable economic growth in recent years, the head of a top regional lending institution said Friday that the bar needs to be set higher.
“Now the question is: ‘Should we be satisfied?’’’ said Enrique García, president of Caracas-based CAF-Development Bank of Latin America. “And the answer is no.”
While Latin America has achieved 4 percent to 5 percent economic growth in recent years, he said that’s not a high enough rate for the sustainable, inclusive growth the region needs. Although Latin American has made strides in reducing poverty, he said, “Inequities remain.’’
Growth must be above 6 percent, or even 7 percent, if Latin America wants to begin to close the gap with developed nations, García told about 200 business leaders, entrepreneurs and policy makers from Latin America at the 18h annual Latin Trade Symposium. The day-long forum, which is organized by Latin Trade magazine, was held at The Four Seasons Hotel in Miami.
When looking at dynamic high-growth Asian countries such as South Korea and Singapore, he said the difference with Latin American countries has been that they have emphasized education and human capital.
It’s essential, he said, that Latin American countries put more emphasis on improving education and access to quality education for all its people. But García said that’s a long-term proposition. “You need 10, 15, 20 years,’’ he said.
The theme of the symposium was “Building the New Latin America: The Leaders, The Companies, The Paradigms for Success.’’ Everything from the region’s growing middle class and engaging with the global economy to the need for improved infrastructure and competitiveness was under discussion.
Alejandro Ramírez, chief executive of Cinépolis, a Mexican-based theater company, agreed that education needs to be a priority, but said, “There’s little awareness there’s an education problem in Mexico.’’
To improve the quality of education, he said 10 young businessmen have formed a group called Mexicanos Primeros that does applied research and public policy advocacy. One of its successes has been to promote a national universal teaching assessment. Before teachers were required to take the exam, teaching quality was very uneven and teachers could even buy their positions, he said.
García said he expected Latin economies to grow by 3.2 percent to 3.5 percent this year and by 4 percent next year, but he said that assumes the U.S. economy continues to improve, European economies won’t deteriorate more and that China’s economy keeps growing at a 7-9 percent rate.
But Chile’s Finance Minister Felipe Larraín said that even with an uncertain world economic picture, “Chile is growing and creating jobs.’’ The Chilean economy grew by 6 percent last year and has grown by 5.5 percent through the first eight months of 2012, he said.
High prices for Chile’s copper have helped, as well as a Chinese market that consumes about 23 percent of Chile’s exports,.
Chile’s strong economic position also has resulted in other dividends in terms of low-cost financing.
Larraín arrived from New York where the day before Chile locked in a historic low rate in the sale of $1.5 billion in bonds. Its 10-year sovereign bonds have an annual yield of 2.38 percent.
“That’s the lowest rate in our history — and the lowest rate for any emerging economy,’’ he said.