according to World Bank data, between 2000 and 2019, the annual growth of the region of Latin America and the Caribbean was at an average of 1.6%. By all accounts, this growth is disappointing if we compare it with the growth of other regions -East Asia (4.8%), Europe and Central Asia (1.9%), Middle East (2.9%), South Asia (6.5%), Sub-Saharan Africa (3.5%)-, as if what we translate in per-capita terms, where the fee would be 0.56%, which is insufficient to achieve a rapid improvement of life for the population.
should Not be surprising, therefore, that the decade closed with protests in several Latin american countries, especially if we see these protests as an expression of dissatisfaction by an economy that does not grow enough to meet the demands and expectations of the societies and by a gap of inequality that, although it has been closing in the last decade it is still excessively high (NB Latin America and the Caribbean has the rate of regional inequality, most high).
For this reason, it can be concluded that the reasons behind the bursts are still largely present, and if not taken note of this situation, the risk is that nothing changes in the region and that the next decade will be equally challenging. We already the first year of that future and it seems necessary that the governments of the region to begin to work in earnest and as soon as possible in an agenda of inclusive growth. It is time to leave behind the cycle of disappointments, to build on the many achievements obtained in the past and giving answers to the demands of our societies, they are raising the rod of their demands. Recognize this as a priority is the first step to transform what today seems to be a challenge into an opportunity of progress.
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The low growth in Latin America is due to different causes, both internal and external. To analyze them is essential. The World Bank has just submitted its report on Global Economic Prospects (GEP, for its acronym in English), a semi-annual publication in which the institution disseminates its analysis of the macro environment international, including estimates of economic growth to 2019 and projections for 2020. The GEP can be taken as a thermometer that measures the health of the economy at local, regional and global. Review global trends may serve to make the economic situation of Latin America in context. And today, that context is telling us that, for now, the temperature will continue to cool.
according To the GEP, the overall situation remains fragile. In fact, the overall annual growth from 2019 (2.4%) has been the lowest since the crisis of 2008-09. And while it is true that in the year 2020 it is expected higher growth (2.5%), the improvement will be very modest. This fragility is due among other reasons to the weakness of international trade and investment, and a slowdown of productivity.
How do you translate this global landscape in the region of Latin America and the Caribbean? In the Latin american context has also been cooled down the economic growth in 2019. Excluding Venezuela -where it is estimated that the economy may have contracted a 35%- the region grew last year to just 0.8% due to weak investment and private consumption.
Is more, the slowdown has been quite homogeneous both because it has affected the greater part of the Latin american countries because it has been in place in almost all sectors of the economy. For this year, we expect a recovery time is projected at 1.8%. But clearly this rate of growth is not going to achieve that the gap in per capita income between the countries of Latin america and the advanced countries will start to close. Again, the concern is that, if you do the rewrite, this story will repeat modelled within a decade.
beyond the growth
But we also know that the outstanding issues of Latin America go far beyond the economic growth and have to do with structural problems that must be resolved, as a persistent inequality or the need to forge the necessary consensus to support growth and social inclusion in State policy-based on a long-term vision.
We are talking about reforms that would improve the business climate and thereby crowd in private investment in Latin america is markedly low.
We are talking about improvements in education, seen that more than half of the boys in the fourth grade are not able to understand a paragraph.
And we're talking about improvements in governance that help to improve the legal security.
These reforms are not easy for many reasons. The business climate, in many cases, affected because many established companies do not see the positive side of reforms that facilitate market entry of new companies that can put in risk their dominant position. In the field of education, besides the need to persevere for many years to have a positive impact, it is well known that the political economy of reforms aimed at improving the quality of the teaching is complicated. And we cannot ignore the difficulties that even the government's more reformist, is to attack the problems of poor governance.
Now, we can observe all these deficits that are a common denominator of our countries as elements of a reality that is unchanging, and the seed of future disappointment, or we can see them as the starting point for a deep discussion to reach agreements that are compelling.
I choose this last option. I think that the challenge of achieving broad consensus in state policies, with the participation of all sectors of our societies, in an open and participatory dialogue in which all voices are heard, offers us today the opportunity to reach social pacts that are the basis for a growth more vigorous and inclusive in our region.
it is Not an easy task, is true. In this dialogue must engage the political, the business, the workers, the organizations of the civil society and the muchos sectors that make up our societies. But there is no other way possible if we want to avoid to look back in ten years and see with horror that we have been spending our efforts. The discontent that in the past few months exhibited our societies is a call to action. Should be capitalized as an opportunity to ensure that the recurrent story of disappointments not repeat in Latin america and the Caribbean.
Jennifer Lopez is the vice-president in office, and director of Strategy and Operations of the World Bank for Latin America and the CaribbeanUpdated Date: 20 January 2020, 05:00