Warning about Latin America Having to Follow New Growth Pattern

In a panel discussion about the challenges facing regional development in the current global scenario, CAF's President, Enrique Garcia, asked not to be discouraged by the apparent end of the heyday, and to think long-term, addressing structural changes that will make sustainable achievements, such as reducing poverty and the rise of the middle classes.

"Things have changed. There are problems, but I think we should weigh things on a scale (...) and look at it mid- and long-term (...) We have to think about structural issues, about convergence with industrialized countries, about how to maintain the success we have achieved regarding poverty reduction," Garcia said.

After recovering from the 2008 global financial crisis, growth in Latin America has slowed down, mainly impacted by the Chinese economy downturn and the falling prices of raw materials. In its latest World Economic Outlook, released in July, the International Monetary Fund (IMF) reduced for the second time this year its economic expansion estimates in the region to 0.5% this year, and 1.7% next year.

Alejandro Werner, Director of the IMF Western Hemisphere Department, pointed out that the region is going through an adjustment stage of its own trade terms, which is actually questioning the macroeconomic frameworks, and making it mandatory to steer towards a "new equilibrium".

According to Werner, Mexican former Deputy Secretary of Finance, "In the long term, the most important issue is how to regain sustained growth in the region (...), to take advantage of this lower-growth scenario, and then, through structural reforms, regional integration, openness, and fostering competitiveness, proceed to re-establish a higher-growth process in the future".

The conference was organized in Washington by CAF, together with the Organization of American States and the Inter-American Dialogue, and this Thursday, the first panel discussions focused on the challenges of Latin America and the sustainability of the middle class, which is vulnerable to this current phase of lower growth.

"Without greater productivity, it is hard to think of middle classes that will be sustainable in the long term," said Santiago Levy, Inter-American Development Bank's Vice President of Sectors and Knowledge.

The experts also highlighted the empowerment of the new middle class, which has actually resulted in a resurgence of social demands.

 "We had a golden decade, with less poverty, an increase in the middle class, a rise in wages (...) and this created a climate of opinion that somehow led to a current frustration at what" the world economy slowdown means, said Enrique Iglesias, former Inter-American Development Bank's president, who was interviewed before the whole audience by analyst Moises Naim.

"The current issue is how to achieve this transition and (...) how to take advantage of those reforms that still need to be accomplished," he added.

The conference is streamed at: /es/actualidad/eventos/2015/09/xix-conferencia-anual-caf/

To watch videos of the discussions mentioned in this article, please access the following links:

Download HD video, at:

http://media.newlink-group.com/clients/CAF/2015/EVENTOS/TV-Highlight-CAF-Sept-10-Spanish.mp4.zip

Watch on YouTube, at:

https://youtu.be/G-W2byIzUis