Global rebalancing poses challenges, opportunities for Caribbean
An IDB study highlights need for fiscal prudency, trade policies to increase the region’s access to Asian, U.S. and European markets.
WASHINGTON, United States, Monday March 28, 2011 – The new economic order that has emerged after the global financial crisis will likely generate an unprecedented favorable international environment for Latin America and the Caribbean in coming years and policymakers in the region should seize the opportunity to adopt policies that reduce external vulnerabilities and ensure sustainable economic growth, according to a study by the Inter-American Development Bank (IDB).
The IDB said that increasing commodity prices, the rise of Asia as a main buyer of Latin American raw materials, low world interest rates and rising capital inflows mean large commodity exporters in South America and commodity importers elsewhere in Latin America and the Caribbean would grow at different speeds, presenting distinct policy challenges.
“The rebalancing in the world economy is providing the seeds of what could be a sustained economic boom in Latin America and the Caribbean,’’ said IDB Principal Economist Alejandro Izquierdo, one of the coordinators of the study.
“However, for this to happen, countries in the region need to address as soon as possible the new challenges posed by this emerging economic environment, particularly in terms of prudent macroeconomic management, new trade opportunities and higher productivity levels.”
The study, ‘One Region, Two Speeds? Challenges of the New Global Economic Order for Latin America and the Caribbean’, coordinated by Izquierdo and Ernesto Talvi, director of the Center of Economic and Social Studies in Uruguay, was presented to the Board of Governors of the IDB during the Bank’s Annual Meeting in Calgary, Canada.
The study provides a detailed analysis of current economic trends that have emerged since the global financial crisis and analyzes the potential role Latin America and the Caribbean can play under this new environment.
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