18.104.22.168 Economic scenarios
Projections of economic evolution for the region strongly depend on the interpretation of the results of the liberalisation process that the region has experienced during the last 20 years, and therefore can be contradictory. On the one hand, economists who favour liberalisation of Latin American economies argue that countries that have implemented these types of policies have improved in terms of growth rate, stability, democracy and even with regard to inequality and poverty (for example: Walton, 2004; World Bank, 2006). On the other hand, another group of experts in economics, sociology and politics is concerned with the effects that neoliberalisation has had for the region, especially in terms of increases in inequality and poverty, but also in terms of lack of economic growth (Huber and Solt, 2004). This is still an unresolved debate that imparts great uncertainty to economic scenarios for Latin America.
The first group’s view provides the following insights for economic prospects. Analysts from the World Bank argue that while the real per capita GDP of Latin America has had a very low growth – about 1.3%/yr average during the 1990 to 2000 period – in the long term (from 2006 to 2015), regional GDP is projected to increase by 3.6%/yr, and per capita income is expected to rise by 2.3%/yr on average (World Bank, 2006). Current estimates forecast a growth of 4%/yr for the region in 2006 and 3.6%/yr in 2007 and real per capita GDP growth of 2.6%/yr and 2.3%/yr, respectively (Loser, 2006; World Bank, 2006). These positive prospects are attributed to the implementation of economic policies such as a substantial reduction of the fiscal imbalances and inflation control that have restrained growth in the past. According to this source, the area is on track to meet its Millennium Development Goals on poverty; however, it is important to note that the region’s performance is not as good as other developing regions such as central Asia and, notably, China. An improvement on this rate of growth could be achieved by consolidating current economic policies (Walton, 2004; World Bank, 2006).
The second group of experts argue that the results of the liberalisation, far from establishing a sound basis for economic growth, have weakened the regional economy, reducing its rate of growth and making it more volatile, exacerbating social inequality and poverty, and limiting the region’s capacity for future growth (Huber and Solt, 2004; Solimano and Soto, 2005). Lack of economic growth, inequality, a deficient legal framework and demographic pressures have been demonstrated to be important factors for increasing environmental depletion and vulnerability to climate variability and extreme events (CEPAL, 2002).