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REGIONAL ECONOMIES DELIVER MIXED, MODERATE-TO-POOR RESULTS.

Article Excerpt
The UN Economic Commission for Latin America and the Caribbean (ECLAC) has released its Preliminary Overview of the Economies of Latin America and the Caribbean for 2003. This year's edition of the annual publication found the regional economy as a whole to have grown by 1.5% during the year, an improvement over the contraction of 0.4% in 2002.

This improvement does not, however, make up for the stagnation of recent years. Per capita GDP is still 1.5% lower than in 1997. Gross capital formation, flat for the year, is 12.5% lower than in 1997. Small improvements are expected to continue, and ECLAC foresees 3.5% growth for the region in 2004. It is expected that, for the first time since 1997, no Latin American economy will experience negative growth in the coming year.

In Central America, the economic year played out differently for each country. Costa Rica closed out the year with a consolidated deficit of 4.1% of GDP, a percentage point higher than the target set by the government. This occurred despite strong growth, and the government will need, says the report, to be vigilant of this in the coming year, in which growth is not expected to be as dynamic. Guatemala has kept control of public finances and has been able to comply with the provisions of its International Monetary Fund (IMF) commitments.

Honduras and Nicaragua, the two countries of Central America eligible for inclusion in the Heavily Indebted Poor Countries Initiative (HIPC), are currently running substantial fiscal deficits, 5.8% and 6.9% of GDP, respectively. To qualify for HIPC benefits, both will have to adopt deficit-reduction policies in 2004.

El Salvador has improved its deficit by a full percentage point since 2002 to 3.5%, but has seen no per capita growth as a result of fiscal policy focused on debt reduction.

Panama was not singled out in the report as having any particular problems, except for budgetary pressures expected as a result of next year's elections.

The...