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.
Colliers International, a real estate services firm, has recognized Port Everglades as “Florida’s best kept secret” in its 2013 North American Port Awards.
“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.
Although Port Everglades’ plan to deepen its channel so it can handle post-Panamax vessels is still under study by the Army Corps of Engineers and funding isn’t yet in place for a deep dredge, Colliers International noted that the port is “still capable of more container growth.’’
A new Florida East Coast Railway container transfer facility at the port, which is expected to greatly reduce traffic congestion from trucks hauling containers on and off the port, is expected to open in mid-2014.
“The significance of a key infrastructure linkage like the Florida East Coat Railway to future global trade and container traffic growth should not be underestimated, especially for Port Everglades,’’ Colliers said.
The Greater Miami Chamber of Commerce is organizing two international business missions in May. The first, May 6-8, will visit Santiago and Santo Domingo in the Dominican Republic. The Caribbean nation is Florida’s largest trading partner among countries that are part of the DR-CAFTA Free Trade Agreement. Participation is open to both chamber members and non-members.
On May 13-17, the chamber’s Americas Linkage program heads to Brazil, South Florida’s largest trading partner. The mission will visit the capital of Brasilia, Goiania and Sao Paulo, Brazil’s largest city.
For information on both missions, visit MiamiChamber.com
The deadline is approaching for a business development mission to Spain that is being organized by Miami-Dade County’s Economic Development and International Trade unit. The June 8-15 mission will visit Madrid and Barcelona. The deadline to register is April 29. Contact Maria Dreyfus-Ulvert at 305-375-1254 or firstname.lastname@example.org