12 November 2012 01:57 [Source: ICIS news]
RIO DE JANEIRO (ICIS)--Domestic demand has emerged as a foundation in several of the economies of Latin America, allowing growth in the region to accelerate next year, an economist said on Sunday.
Economic growth is crucial for petrochemicals because demand is strongly correlated with GDP.
Overall, the economy in Latin America should grow by 4-4.5% in 2013, compared with growth of below 3% in 2012, said Eduardo Giannetti da Fonseca, a Brazilian economist.
He made his comments during a presentation at the Latin American Petrochemical Association (APLA) annual meeting.
One of the bright spots for Latin America is its employment rate, Fonseca said. "Even with the low growth in 2012, employment is still growing in Latin America."
"This gives us optimism in the future," he added.
Fonseca estimated that the unemployment rate in Latin America is about 6-7%, compared with about 12% in the eurozone.
In addition, wages are growing in many Latin American countries, Fonseca said.
While higher wages aggravate inflation, they also create a vigorous domestic market.
Millions have joined the middle class, especially in Brazil, Fonseca said.
"We have a robust macro economy, we have a dynamic domestic market, and we have natural resources, Fonseca said. “Our continent is doing very well."
For the most part, Latin America has emerged from the downturn with a strong reputation for fiscal responsibility, he said. As a relation to GDP, public debt-to-GDP is at levels much lower than countries in the Organisation for Economic Co-operation and Development (OECD).
In fact, the region did not lose access to financing during the recession, he said.
"It's incredible that the world should have moved in this direction," Fonseca said.
Looking back, Latin America performed well during the economic crisis in 2008-2009, Fonseca said. Mexico was the exception, since its economy is so tied to that of the US.
Following the crisis, Latin America rebounded, especially Brazil, he said. The rate of growth ultimately reached unsustainable levels and slowed down following 2010.
The APLA conference ends on Tuesday.
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