Economic growth in Latin America is slowing to a pace
that is insufficient to meet social demands for better public services from its
new middle class, the Inter-American Development Bank said.
The region will grow from 3 percent to 3.5 percent
annually over the next years, compared to an average 4.9 percent in the five
years prior to the 2008 financial crisis, the IDB said in a report distributed
yesterday at its annual meeting in Costa do Sauipe, Brazil. The region has
become more vulnerable to external shocks because governments increased
spending and companies took on more foreign debt, the bank said.
“Latin America will grow below the performance of the
global economy,” Jose Juan Ruiz, IDB chief economist, told reporters after
presenting the report yesterday. “That is not enough to meet expectations and
social challenges.”
Much Harder
A credit boom over the past decade, which has been
financed in part by increasing international borrowing, helped fuel growth in
Latin America. As higher returns in advanced economies reduce demand for
financial assets in the region, possible rapid currency depreciation may
produce knock-on effects in domestic financial systems, the IDB said.
IDB data indicate that companies relied more on
foreign bond markets after the 2008 crisis. Banks and corporations in Brazil,
Chile, Colombia, Mexico and Peru and their subsidiaries abroad increased their
foreign bond sales to $343 billion in the four years through the third quarter
of 2013, up from $97.6 billion in the four years through the third quarter of
2008.
http://www.bloomberg.com/news/2014-03-31/slow-latin-america-growth-won-t-meet-social-demand-idb-says-1-.html
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