With an average economic growth rate of 4.3 percent, Latin America has witnessed robust growth in 2005, but problems such as external debt, chronic poverty and unemployment continue to pose tough challenges to the region.
DYNAMIC ECONOMIES, GROWING TRADE
The Economic Commission for Latin America and the Caribbean (ECLAC) said Latin America has experienced its fourth consecutive year of growth and forecast that the trend would continue, with a region-wide growth of nearly 4 percent in 2006.
Increasing foreign trade, more investment and remittances, rising domestic consumption and controlled inflation are among the factors that have helped boost the growth.
From January to September, Venezuela led the region with a growth rate of 9.1 percent followed by Argentina with 9 percent, while Mexico's economy grew by 3 percent and Brazil 2.6 percent.
For Argentina and Venezuela, the region's two fastest growing economies, the expansion was more of a recovery as both countries were bouncing back from previous economic contractions.
In 2005, Latin America remained an attractive destination for foreign direct investment (FDI). However, FDI was almost monopolized by the two regional giants Mexico and Brazil, which jointly accounted for 63 percent of the region's gross domestic product (GDP).
FDI for the whole year is estimated at US$46 billion, 33 percent more than that of 2004. Of the total, Mexico obtained US$12.9 billion, or 28 percent, and Brazil got US$16 billion, or 34.8 percent. Argentina received US$4.2 billion, just under 10 percent.
Remittances from emigrants have also contributed to the growth, lifting some 2.5 million Latin Americans out of poverty, according to the ECLAC. The Inter American Development Bank said in a report that remittances will reach US$50 billion by the end of this year, up by 11 percent from 2004.
The global increase in oil prices have benefited the region's oil exporters Venezuela and Mexico, but hurt net oil importers like the Central American nations and the Dominican Republic.
In the passing year of 2005, Mexico has maintained its position as the region's largest exporter, selling some US$400 billion worth of products overseas, followed by Brazil with US$174.4 billion.
The Montevideo-based Latin American Integration Organization (ALADI) said the ALADI members are ending the year with a regional trade of US$76 billion. The bloc groups Argentina, Bolivia, Brazil, Colombia, Cuba, Chile, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela.
DEBT, POVERTY REMAIN UNRESOLVED
Despite positive macroeconomic data, debt, poverty, unemployment and inequality remain Latin America's main challenges.
External debt continues to be a sticking problem for Latin American countries, although it has been brought under control. The debt has drained resources that could otherwise been used for development. Of the US$700 billion of debt still outstanding in the region, 80 percent is owed by Brazil, Argentina and MexiCo
In July, Brazil's external debt was US$181.6 billion, while Mexico's stood at US$80 billion, according to the two governments. Argentina's public debt, both domestic and foreign, has been reduced from US$191 billion to US$125 billion through renegotiations.
Poverty is another problem for Latin America. The ECLAC said at the end of November that while the number of people living in poverty had gone down in most countries, it was still too high.
The Santiago-based organization said that around 213 million people, or 40.6 percent of the region's total population of 523 million, live in poverty and 88 million of them in abject poverty.
It said poverty is common in rural areas, and lack of housing, schooling and medical care go hand in hand with poverty in Latin America.
The International Labor Organization (ILO) said there are 20 million unemployed in the region, but adding that informal employment is rising.
The ECLAC's executive secretary, Argentina's Jose Luis Machinea, said fighting poverty demands an increase in the efficiency of social policy and a reduction in the inequality of countries in the ECLAC area.