Most Latin American and Caribbean economies survived the Great Recession in relatively good shape. But now as the global slowdown threatens to hang on indefinitely, what is their fate?
The countries of the region will grow faster — at an estimated rate of 3.9 percent over the next five years — than the global economy. “Latin America will gain weight in the world economy,’’ said José Juan Ruiz, chief economist at the Inter-American Development Bank.
But that doesn’t mean Latin American and Caribbean economies will be impervious to sluggish global growth. Commodity prices are expected to fall, and investment is expected to decelerate.
Over the next five years, global growth may be 0.5 percent lower than it was during 2003-2007, the period just before the Great Recession, and that could trigger economic growth in the region that is nearly one full percentage point lower than it was in the five-year period beginning in 2003, according to a new IDB report.
“For countries growing at a rate of 4 percent, that’s the equivalent of losing 25 percent of their potential growth and that’s not good,’’ said Ruiz, who was in Miami recently to speak at a Latin American Symposium organized by the University of Miami’s Center for Hemispheric Policy.
With fiscal and monetary policy expected to be of limited use in the face of a decline in world economic growth, the report argues that the moment has come for Latin America and the Caribbean “to reignite the reform agenda.’’
The countries of the region, Ruiz said, need to reallocate resources to increase productivity, put more emphasis on improving education and equality, reform labor markets to reduce the number of workers in the informal sector who pay no taxes, undertake tax reform and invest in improving infrastructure.
Ruiz said there will be no one-size-fits-all strategy because the economic performance of individual countries is expected to vary widely.
Over the next five years, Mexico and Brazil are expected to grow 3.5 to 4.5 percent. But, Ruiz said, “Some countries in the region are going to be in a very difficult situation.’’
Among them, he said, are a number of the small economies in the Caribbean, Argentina, Venezuela and some Central American economies.
The study, Rethinking Reforms: How Latin America and the Caribbean Can Escape Suppressed World Growth, says that if only Brazil and Mexico — the two largest regional economies — undertake reforms, the impact on other economies will be limited with the typical third country only growing an additional .25 percent from the spillover effect.
But if all the countries of the region undertook reforms that accelerated growth, the study said regional spillovers would increase growth from 3.9 percent to more than 6 percent.
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“Port Everglades is probably the least understood Florida port, and certainly its best-kept secret. Because it shares a Customs District with Miami, some of its container traffic is ascribed to the Port of Miami,’’ said Colliers.
The real estate services company said Port Everglades actually handled more TEUs (the equivalent of a 20-foot trailer) than any other Florida port, and it now ranks among North America’s 10 busiest container ports with 930,000 TEUs of cargo in 2012, compared to PortMiami’s container traffic of 925,000 TEUs.