Latin America is experiencing its best growth cycle in almost three decades and the outlook for 2006 remains promising, said IDB President, Luis Alberto Moreno today in Paris at the Fourth Edition of the Europe-Latin America Forum, organized by the IDB’s Special Office in Europe and the French Ministry of External Relations.
In his speech, presented to 300 academics, businessmen, diplomats and students, Moreno recalled that since mid-2003, the average regional growth rates have reached 4.9 percent annually, and it is hoped that the region’s economies will grow between 4.3 and 4.5 percent in 2006, in the context of low inflation rates (5.5% regional average in 2005).
Other positive macroeconomic indicators highlighted by Moreno were higher levels of investment – which have increased significantly to almost 20% of regional GDP, partly due to the resurgence of foreign investment – and decreasing indebtedness from 72 to 53 percent of regional GDP from 2002 to 2005.
These positive economic outcomes also reflect a slight improvement in social indicators. According to CEPAL, the rise in employment levels and salaries has enabled 13 million Latin Americans to climb out of poverty in the last two years.
President Moreno stressed that he does not share the same worries as other analysts regarding the possible consequences of an eventual leftward shift in the region. There is a wide consensus among the majority of countries and political powers that economic stability is a requirement for development. Prudent economic management is the rule, not the exception. For the next governments, things shouldn’t be very different. All governments that come to power will share the central challenge of increasing and sustaining economic growth, and above all of improving the quality of this growth in terms of equity and employment, he added.
The IDB will continue to work with all democratically elected governments, guaranteed Moreno. The IDB is committed to collaborating with all governments in the region and is currently working towards reforming its processes and capabilities to become more efficient, creative and responsive to the specific development needs of each country.
In terms of relations with Europe, Moreno called on European companies to generate a “third wave” of investment in Latin America, focusing on exports and new technologies, led by small and medium sized companies. Economic relations between the two regions have been diminishing in recent years - from making up 25% of Latin American exports in 1990, Europe only accounted for 12 percent in 2005, recalled Moreno.
The IDB President also discussed the role of migrant remittances in Latin American economies. Out of the estimated 2005 total of $55 billion in remittances to Latin America and the Caribbean, over 15 percent, or close to $10 million, came from Europe.
The Europe-Latin America Forum was President Moreno’s second to last stop in his tour of seven European countries, which also included the World Economic Forum in Davos. In Paris, the President’s agenda included a meeting with twenty of France’s largest companies, and bilateral meetings with Finance Minister, Thierry Breton, and other government officials.