(15 February 2013) The Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, met on Wednesday 13th February with the President of the Council of State and the Council of Ministers of Cuba, Raúl Castro, as part of an official visit to the island that began on Monday 11 February and ends today.

The Cuban President, who was accompanied by the Minister of Foreign Affairs, Bruno Rodríguez, and the Minister of Foreign Trade and Foreign Investment, Rodrigo Malmierca, thanked the willingness of ECLAC to support the work of the Community of Latin American and Caribbean States (CELAC) in 2013, as its pre tempore presidency is held by Cuba.

During her visit to the island, the Executive Secretary highlighted how CELAC had matured since it was set up in 2011 and the role it can play in regional integration by building bridges of communication among Latin American and Caribbean countries and helping the region to act as a bloc in its dealings with other world nations and regions.

As well as discussing many items on the international agenda, such as the economic and environmental crisis and high food prices, Alicia Bárcena and Raúl Castro analysed ways that ECLAC and the Government of Cuba can cooperate in areas such as the fiscal policy being implemented by the country.

During her week in the Cuban capital, the senior United Nations official held meetings with Government authorities and took part in several academic activities, including a lecture at the University of Havana, where she was presented with the University’s 280th anniversary plaque, as well as a seminar on 50 years of planning on the island.

Ms. Bárcena met with authorities including the Vice-President of the Council of State and Council of Ministers, Marino Murillo, Vice-President of the Council of Ministers and Minister of Economy and Planning, Adel Yzquierdo, Minister of Finance and Prices, Lina Pedraza, President of the Central Bank of Cuba, Ernesto Medina Villaveirán, interim Director of the Centre for World Economy Studies (CIEM), Ramón Pichs Madruga, and the Vice-Minister of Foreign Trade and Foreign Investment, Ileana Núñez.

She also met with the Vice-Minister for Foreign Affairs, Abelardo Moreno, the President of the Environment Agency (AMA), Gisela Alonso, and the Head of the National Office of Statistics and Information (ONEI), Alexander Rodríguez.

The delegation accompanying the most senior representative of ECLAC consisted in Raúl García-Buchaca, Director of the Programme Planning and Operations Division, Hugo Beteta, Director of the ECLAC subregional headquarters in Mexico, and Luis F. Yáñez, Officer-in-Charge of the Secretariat of the Commission.

As part of the mission to Cuba, on Monday Ms. Bárcena and her delegation placed a floral tribute on the José Martí Memorial in the Plaza de la Revolución.

Renowned Latin American and European economists met at the headquarters of the Economic Commission for Latin America and the Caribbean (ECLAC) in Santiago, Chile, to discuss the opportunities and challenges of the biregional relationship in the current scenario of international turmoil.

The event is taking place as part of the 1st Summit of the Community of Latin American and Caribbean States and the European Union (CELAC-EU), which will bring together representatives from 60 countries on 26 and 27 January in the Chilean capital.

The LAC-EU Economic Forum 2013: Globalization, International Trade and the Welfare State at Crossroads: Converging Views in European and Latam countries? was opened on Monday 21 January by Alicia Bárcena, Executive Secretary of ECLAC, and François Bourguignon, Director of the Paris School of Economics.

According to Alicia Bárcena “Latin America is in a positive state of mind, despite the turmoil in the world economy. The region is learning from the past and trying new paths. The Latin American foreign debt crisis happened 30 years ago, and led to a lost decade for the region. We are worried that the same may happen in Europe” .

The ECLAC leader added that “the South is no longer the same. Europe will see a different Latin America, because the region has changed. This implies tackling new global challenges responsibly, and making commitments on issues such as climate change and financial security”.

François Bourguignon described the firstLAC-EU Economic Forum as a space for reflection aimed at identifying and sharing lessons learned, as well as reaching common visions on issues relevant to both regions, such as international financial governance.

He also emphasized that the Forum, which ends on Tuesday 22 January, is also an opportunity for Latin American and European economists to ask questions and send messages to countries participating in the 1st CELAC-EU Summit.

The Economic Forum was jointly organized by ECLAC and the Paris School of Economics, with support from the French Foreign Affairs Ministry. Other contributors include the German Federal Ministry for Economic Cooperation and Development and the France-based Institute for the Americas (IDA). Sponsors include the EU-LAC Foundation and the Latin American Centre for Relations with Europe (CELARE).

In his address, Mr. Bourguignon compared trends in a few key indicators for both regions in recent decades, including GDP growth rate, share of exports in GDP and the Gini coefficient measuring inequality.

According to the Director of the Paris School of Economics, while inequality has fallen in Latin America and the Caribbean in recent years, it is on the rise in Europe.  He also referred to the role of social protection policies in this regard.

Ms. Bárcena stated that, although the European Union is the main direct investor in Latin America and the Caribbean and the second main trading partner, the biregional relationship has stood still in recent years due to several factors.

These include the dramatic economic crisis affecting some European countries, the new position of China, the incorporation of new Member States to the European Union and the growing relevance of the Middle East and North Africa in the European foreign agenda.

In this sense, the ECLAC Executive Secretary appreciated the holding of the First CELAC-EU Summit to analyse the type of relationship that can be built to face the future. She added that this meeting is also “a very important step towards one of ECLAC‘s most cherished dreams: regional integration”.

The two days of the Forum – which hopes to become a new high-level space for biregional dialogue- will feature discussions on topics such as asymmetries in economic policy responses, trade imbalances, industrial development and environmental issues, and the future of the welfare state. Some policy proposals will also be put forward.

According to the Preliminary Overview of the Economies of Latin America and the Caribbean 2012, launched at a press conference by the Executive Secretary of this United Nations body, Alicia Bárcena, next year the region will grow by around 3.8%, thanks mainly to the recovery of the economies of Argentina and Brazil, as well as ongoing buoyant internal demand in several countries.

The region will end 2012 with GDP growth of 3.1%, which is higher than the expected figures for world growth (2.2%), but lower than the 4.3% posted in 2011.  This shows that the world economic crisis had a negative but not dramatic impact on the continent, as the region maintained a certain resilience to external shocks throughout the year.

Despite the above, the ECLAC document states that Latin American and Caribbean economies remain largely dependent on world economic trends in 2013.  The most likely scenario is that slow growth (and even recession in some cases) will continue in Europe during 2013, although this might also give rise to agreements that could gradually lead to a resolution of the financial, fiscal and competition imbalances that are currently in place.

In the United States, the probability of fiscal agreement increased following the recent presidential elections. China could post higher growth rates this year or maintain current levels, depending on the extent to which it manages to boost internal demand and keep inflationary pressure under control, at the same time as recovering export growth. It is hoped that oil will not become an additional cause of instability for geopolitical reasons.

Continuously buoyant internal demand in many of the region’s economies will result from improved labour indicators, increased bank credit to the private sector and rising commodity prices that will not fall significantly despite high external uncertainty.

Caribbean countries will remain fiscally fragile, and will require reforms accompanied by external support to ensure sustainable fiscal consolidation trajectories.

According to Alicia Bárcena, who was presenting the study: “The challenge for Latin America and the Caribbean is still to increase and stabilize investment growth, and not to depend exclusively on consumption as a means of driving structural change with equality, incorporating technical progress and delivering sustainable growth”.

Overview of 2012

In 2012, recession in Europe (resulting from financial, fiscal and competitiveness imbalances) combined with the slowdown in China and modest growth in the United States to produce a significant deterioration in the world economy. Growth rates of world trade and output fell, capital inflows to developing countries shrank and volatility increased.

The main impact of the deterioration on Latin America and the Caribbean was in the trade sphere, as growth in the region’s export values fell sharply from 23.9% in 2011 to an estimated 1.6% in 2012.

The regional performance was affected by slower growth in two of the region’s largest economies: Argentina (2.2% in 2012, compared with 8.9% in 2011) and Brazil (1.2% compared with 2.7% in 2011) – as these account for about 41.5% of regional GDP.  In 2013, both countries are expected to post a recovery (3.9% in Argentina and 4.0% in Brazil).

According to ECLAC’s Preliminary Overview, Panama will remain the region’s fastest growing economy in 2012 (an estimated 10.5%), followed by Peru (6.2%), Chile (5.5%) and the Bolivarian Republic of Venezuela (5.3%). Paraguay, Saint Kitts and Nevis and Jamaica will contract (by -1.8%, -0.8% and -0.2%, respectively), while Mexico will grow by 3.8%. Central America as a whole will grow by 4.2%, South America by 2.7% and the Caribbean by 1.1%.

The study adds that, given weakened external demand in the wake of the international crisis, the region’s growth was based on expanding internal demand on the back of rising wages and credit, which is partly attributable to monetary or fiscal policy in most countries.

Employment and wages rose in 2012, and there was a larger reduction in unemployment among women (-0.3 percentage points from the simple average of countries with information available) than among men (-0.1%).  For the region as a whole, the urban unemployment rate went from 6.7% in 2011 to 6.4% in 2012, which is a significant figure in the context of a slowing world economy.

Throughout the year, worldwide financial instability reduced inflows of short-term capital and increased exchange-rate volatility in the region’s two largest countries (Brazil and Mexico), while upward pressure on currency appreciation decreased. In the fiscal sphere, the gap between income and expenditure widened in most countries (with a few exceptions), due to a higher increase in spending (1.5 percentage points of GDP) than in income (one percentage point). The overall fiscal deficit in Latin America expanded from -1.6% of GDP to -2.0% of GDP and in the Caribbean from -3.6% to -4% of GDP.

The report added that investment played a less significant role in the increase in growth in 2012 than in 2011, mainly because of reduced investment in Argentina and Brazil (as they account for the lion’s share of the regional measurement). However, the region’s average investment ratio stood at 22.9% of GDP in 2012, which is the highest rate recorded since 1981.