Latin America poised for exit from crisis: IADB

July 04, 2009 08:41:39 AM

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Latin America and the Caribbean are well placed to emerge from the storm buffeting much of the global economy, multilateral lenders said here on Friday.

"There is no doubt that the big surprise for the everyone is that Latin America and the Caribbean will be one of the regions that can most quickly exit the crisis," said Luis Alberto Moreno, head of the Inter-American Development Bank.

"It depends how the international recovery goes but, still, all the projections point to Latin America beginning to show better results."

But the outlook is not universally bright.

The proximity of some countries to the US epicenter of the crisis is likely to delay their recovery, most notably Mexico -- one for Latin America's chief economic engines.

While many economists had hoped Latin America's domestic markets had grown sufficiently independent to avoid contagion from a US-led slowdown, the IMF's Nicolas Eyzaguirre said slow growth in the developed world would still hurt the region's growth outlook this year.

"For Latin America we have had to lower (growth forecasts), because other destination markets, like Europe and Japan, and capital flows have not normalized at the pace that we had hoped." said Eyzaguirre, who heads the IMF's Western Hemisphere operations.

The Washington-based lender predicted the economies of Latin America would contract, on average, by over two percent this year.

The IMF has forecast that growth in 2010 will rebound into positive territory, growing 1.6 percent.

But the World Bank warned the region also faces major challenges ahead, with 181 million people living in poverty and 73 million in extreme poverty.