Booming Latin America offers trading path out of recession
OPINION:A joint article by Latin American ambassadors María Esther Teresa Bondanza, of Argentina; Pedro Fernando Bretas Bastos, of Brazil; Teresita de Caridad Trujillo Hernandez, of Cuba; Leonel Fernando Searle Couve, of Chile; and Carlos Garcia de Alba Zepeda, of Mexico
THE FIVE Latin American ambassadors in Ireland believe this country should turn its gaze to the region that accounts for 9 per cent of the world population to diversify its trade and strengthen its position worldwide. Latin America represents 16 per cent of world trade and, despite a global outlook for slow growth, its countries collectively grew by 4.9 per cent per annum between 2003 and 2008.
Two decades of democracy and macroeconomic policies have led to the development of a growing middle class of 180 million, and much higher levels of consumption. The region attracts 32 per cent of global investment, and this year Brazil overtook the UK to take sixth place in the world economy.
In 2011, our five countries alone exported €650 billion (up 20 per cent on 2010) and imported €673 billion (up 20.6 per cent on 2010).
Despite the difficulties and diversity that still persist in the huge region, Latin America has lived the best years of its history over the last 30 years.
Poverty has decreased: according to the Economic Commission for Latin America and the Caribbean (Eclac), between 1990 and 2010, the region’s poverty index has fallen by 17 per cent to stabilise at 31 per cent of the population, while the proportion living in extreme poverty was reduced by 10 points to 12 per cent.
At the same time the countries have substantially improved education, key to the long-term eradication of poverty.
Despite persisting social inequality and a high index of violence in some regions, there was an average economic growth of 6 per cent in 2010, while in the US and Europe over the same period, growth rates were negative. According to OECD and the Eclac forecasts, Latin America will grow by between 4 per cent and 4.5 per cent in 2012.
Argentina, Brazil, Chile and Mexico have been at the forefront in the internationalisation of our enterprises, paying close heed to technological development and innovation.
Growth has been sustained due in part to high prices in raw materials, mainly in farming and minerals, and to exports, above all directed to emerging Asian countries. While in the past Latin America exported mainly to the US, over recent years its markets have diversified and China is now a key partner. It is the main export destination for Brazil and Chile, and the second for Argentina, as well as for Cuba; and is the third-largest investor in the region, with 9 per cent of foreign direct investment (the US is still top at 17 per cent).
Mexico, Central America and the Caribbean, due to their geographical vicinity, traditionally concentrate their trade with the US.
In its most recent report on competitiveness the Davos Economic Forum highlighted that Latin America is one of the world’s most dynamic areas and considered this to be its decade.
Based on data from official sources and from almost 13,000 interviews with entrepreneurs, it found the area has had a “fast and robust” recovery and cited its macroeconomic stability and increasingly dynamic internal markets.
The Ibero-American General Secretariat, based in Madrid, reports that in Latin America, south-south co-operation has strengthened and at present there are 1,200 collaboration projects in operation, of which 90 per cent are concentrated in seven countries: Argentina, Brazil, Colombia, Cuba, Chile, Mexico and Venezuela.
At the beginning of March, 33 nations of the region formed the Community of Latin American and Caribbean States, an instrument for dialogue and agreement in the region that also strives for deeper integration in the economic sphere.
The region avails of better skilled labour and offers significant investment opportunities.
For all the above reasons, Latin America is an area of multiple attractions and it will also be hosting important international events in a number of fields. Brazil hosts the soccer World Cup in 2014 and the 2016 Olympics.
In June, Mexico will organise the G20 summit, involving countries that between them make up 80 per cent of the global population and global GDP.
In January 2013, Chile will host the seventh Latin America and the Caribbean-European Union summit, where both regions will work together for the creation of a strategic alliance through such biannual biregional meetings.
Latin America would like to have its own financial model to shield itself against the main problems that afflict the more industrialised nations.
Faced with these new realities, we, the representatives of the five embassies in Ireland, believe that Latin America, with its vigorous international leadership and economic opportunities, is a region which Europe should take advantage of to overcome its current difficulties.
For historical and geographical reasons and with its huge diaspora, Ireland has concentrated on its relationships with Europe, the US, the UK, and more recently, Asia.
But Ireland has its most dynamic power engine in the export sector, and Latin America is now one of new frontiers to be explored more thoroughly to help break out of recession.