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It's Latin America's fiesta, and USA's not invited

In contrast to the US, Latin America's economic growth is soaring. ¿Que pasa?
Panama hat 2012 06 14Enlarge
Hats off to Panama. The UN expects the Central American country's economy to grow at a clip of 8 percent this year. (Alan Crowhurst/AFP/Getty Images)

Many families across the US are getting poorer.

Meanwhile, against the odds, a different lot of “Americanos” are fairing quite all right.

This year in Latin America, some economies are even expected to grow at formidable rates. Check out these growth projections: 5 percent in Costa Rica and Venezuela; 5.7 percent in Peru; 8 percent in Panama?

These are highlights of a new report released on Thursday by the United Nations’ Latin America economics commission (available for PDF download here).

Overall, the commission predicts 3.7 percent growth for Latin America and the Caribbean in 2012. That’s slower than last year’s 4.3 percent, but in a climate like today’s, it's nothing to sneeze at. The emerging Latin economies are growing more quickly than the US. Goldman Sachs' estimates the US economy will expand by just 1.6 percent in the second quarter of this year.

Those familiar with the UN commission’s forecasts might think you’re experiencing deja vu with this “new” projection. You’re not. It’s exactly the same as the 2012 estimate released in December 2011.

So why is it blogworthy? Precisely for that reason. Think of the tempest that has brewed since December. It’s remarkable that the emerging economies of Latin America — so reliant on trade with the US, EU and Asia — merit the same projections as before.

It used to be that whenever America sneezed, the Americas caught a cold. That's clearly changing. 

So what’s driving the region’s economic growth this year? Consumerism, mostly.

“In the first quarter of 2012, growth was associated with increased internal demand. Services, and particularly trade, remained one of the most buoyant sectors. Private consumption was responsible for the bulk of the rise in regional gross domestic product (GDP), thanks to a rise in employment and wages, the ongoing credit expansion and, in some countries, increased remittances mainly from the United States,” ECLAC says.

That last bit is extraordinary. Even despite economic hardship in the US, remittances — the cash immigrant workers send home that keeps many countless afloat — are increasing from the United States. Interesting.

The Inter-American Development Bank recently mapped out 2011 remittance inflows to Latin America and Caribbean countries — up an annual 6 percent — like this:

Surely, GDP — the sum of all goods and services produced in a country — is not the only be-all and end-all. It’s also good to think about “how much well-being do you get for your resource use,” says Nic Marks, on the website for his organization Happy Planet Index. The index ranks countries by life-expectancy, “experienced well-being” and ecological footprint. Costa Rica came out the happiest.

For many analysts, though, economic growth is a measure of what makes the world go round. 

But this year's not all one big fiesta for Latin America. Take a sobering look at Brazil. That mammoth of South America is in a slump. Its growth is expected to trail neighbors in the Americas. The UN commission puts Brazil’s GDP growth at just 2.7 percent. The Associated Press’ Juliana Barbassa writes why.

“Prices for exported commodities such as iron ore and soybeans are drooping due to concerns over Chinese growth. Economic turmoil in Europe is cutting into demand for manufactured goods such as aircraft. Meanwhile, Brazil's still-strong currency makes its exports less competitive. Investors are pulling billions of dollars out of Brazil and other developing countries.”

http://www.globalpost.com/dispatches/globalpost-blogs/chatter/latin-america-2012-economic-growth

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