That’s a slowdown from last year when the region’s economic growth rate was 5.9 percent but slightly better than a 2011 forecast of 4.2 percent that ECLAC made in December.
Growth rates for 11 countries — eight of them in South America — were expected to top 5 percent. Argentina (8.3 percent), Panama (8.5 percent) and Haiti (8 percent) were the countries predicted to have the highest growth rates. But Haiti, still recovering from the 2010 earthquake that caused its gross national product to tumble to - 5.1 percent, is building on a very low base.
The medium-term economic outlook for the region is the “best in recent history,” said Lisa Schineller, an economist and director of sovereign ratings for Standard & Poor’s, in a conference call earlier this week.
The growth, she said, is being fueled by an increasing middle-class as well as some countries’ links with fast-growing China.
Brazil, whose economy soared by 7.5 percent last year, will see slower growth this year, according to the ECLAC forecast. It estimated 4 percent growth for Brazil in 2011.
The ECLAC report raised a few cautionary flags, noting that rising international prices of food and fuel coupled with higher internal demand has led to higher inflationary pressures. Both Venezuela, whose economic growth is estimated at 4.5 percent, and Argentina are experiencing soaring inflation.
“Most of the good news is in South America,’’ pointed out Joydeep Mukherji, a Standard & Poor’s credit analyst.
That’s because a number of the South American economies that are doing well are net exporters of commodities and more connected to European and Asian markets, he said.
Central America and Caribbean economies, on the other hand, tend to be commodity importers and are more dependent on the U.S. economy. Sluggish U.S. demand and a slowdown in remittances from pre-recession levels have both had an adverse impact on Central American and Caribbean economies.
ECLAC — which is based in Santiago, Chile — estimated that Caribbean economies would average a mere 1.9 percent GDP growth and Central America 4.3 percent growth, compared to economic growth of 5.1 percent for South American countries. Cuba, with an estimated 3 percent growth, is above the Caribbean average but was still below the average estimated growth of 4.7 percent for Latin American countries.
