Latin American and Caribbean leaders expect per capita income to fall or grow moderately in the 2009–2012 period and governments to rely more on financing from international institutions, according to a survey by the Inter-American Development Bank (IDB). The expectations contrast sharply with the recent economic performance in the region, where product per capita grew 4.1 percent annually in the past five years.
Leaders in the region expect governments to maintain or increase their influence in the economy and they named fighting poverty and inequality as their top developmental challenge in the next four years, closely followed by reducing violence and crime and improving the quality of education.
“The survey shows that leaders in Latin America and the Caribbean are very worried about the world economy and the possible impacts of the crisis on poverty,’’ said Luis Alberto Moreno, president of the IDB. “Multilateral organizations such as the IDB have an important anti-cyclical role to play and they must step up their support even more in coming years to meet the region’s growing needs.’’
The IDB will debate the findings of the survey and policy responses to the ongoing global financial crisis during its 50th annual meeting of its board of governors in Medellín, Colombia on March 27–31. Representatives of the Bank’s 48 member countries, which this year will include China for the first time, will also discuss ways the IDB can increase support to the region.
The IDB surveyed 317 influential people in the government, private sector, nonprofit organizations, media and academia in 26 member countries in Latin America and the Caribbean between November 2008 and January 2009. The survey intended to gauge the perception of opinion makers, politicians, government officials, university professors, members of civil society and company executives about the economy.
The survey will be presented during the seminar “The Biggest Challenges of Our Time” on March 28, which will have IDB President Luis Alberto Moreno as a moderator of the seminar and Enrique V. Iglesias, Secretary General of the Ibero-American General Secretariat, as one of the panelists.
Most Pessimistic and Optimistic
A full 92 percent of the leaders in the region expect gross domestic product to grow less or just slightly above the increase in the population, according to the survey. Leaders in Nicaragua, Haiti and El Salvador are the most pessimistic. More than two-thirds of the leaders surveyed in those three countries expect per capita income to fall in the next four years.
Peru and Chile are among the most optimistic. About a third of the leaders polled in Peru and over a fifth of those in Chile said they expect income per capita increase to exceed population growth by several percentage points.
Nearly half of the leaders in the survey expect their countries to rely more on international organizations such as the IDB to finance their current accounts and budgets. Caribbean and Central American nations are among the countries where the majority of the leaders expect reliance on financing from international organizations to increase in the next four years.
In larger countries such as Brazil, Chile and Mexico, the majority of the leaders expect the reliance on international financing to be little changed. Only in Nicaragua and Haiti, the majority of the leaders expect financing from international organizations to fall in the next four years.
Reliance on Financing from International Organizations 2009-2012
More than 90 percent of the total leaders polled expect the government to either increase or maintain its influence over the economy in the next four years, with 49 percent expecting it will change little and 43 percent expecting a greater role for government. All of the people polled in Bolivia, Ecuador and Venezuela expect the government to increase its role in the economy.
Government Influence on the Economy 2009-2012
Biggest Developmental Challenges
The crisis has changed the view on some of the biggest developmental challenges the region will face in the next four years. The survey asked leaders to vote on the five most important developmental challenges for their country from a list of 16 items.
The biggest change is related to the situation of the economy and financial institutions, which are now among the five biggest sources of concern for the region. In a similar survey in 2006, such item was not even among the top 10 most voted issues.
Poverty and inequality received the biggest amount of votes from leaders in the 2009 survey compared with education three years ago. Violence and crime, particularly linked to drug trafficking, is the second biggest source of concern for the region’s leaders, rising from fourth place in the 2006 survey.
The list of most important developmental challenges varied widely, depending on the country. For bigger and richer countries such as Brazil and Chile, education is considered the No. 1 problem. For Venezuela and Ecuador the situation of the macroeconomy is the biggest source of concern while for El Salvador and Guatemala, poverty and inequality is the biggest developmental challenge.