China, Brazil to fuel global economic growth

In this April 15, 2010 file picture, from left, Russia’s President Dmitry Medvedev, President Luiz Inacio Lula da Silva, China’s President Hu Jintao and India’s Prime Minister Manmohan Singh pose for the official photo of the BRIC (Brazil, Russia, India, China) summit at the Itamaraty palace in Brasilia.

AP FILE

In this April 15, 2010 file picture, from left, Russia’s President Dmitry Medvedev, President Luiz Inacio Lula da Silva, China’s President Hu Jintao and India’s Prime Minister Manmohan Singh pose for the official photo of the BRIC (Brazil, Russia, India, China) summit at the Itamaraty palace in Brasilia.
New economic reports released Wednesday show that Latin America and the East Asian Tigers are lifting the world economic tide, showing more resilience to the global economic crisis than the United States and many European nations.

Such a growth path is a break from the past for Latin American and Caribbean countries, which have had a “history of frequent and devastating financial crises,” the World Bank said in a report called The New Face of Latin America and the Caribbean.

In another economic report released Wednesday, the International Monetary Fund predicted the world economy will expand 4.8 percent this year and 4.2 percent next year.

But it is China and other emerging nations such as Brazil that are leading the way. The IMF forecast Chinese growth at 10.5 percent this year and 9.6 percent next year. Brazil’s economy is expected to chug along at 7.5 percent this year before slowing to 4.1 percent growth in 2011.

Meanwhile, the IMF predicts 2.6 percent growth this year for the United States — a weak performance coming after a recession — and 2.3 percent growth in 2011. As recently as July, the IMF had predicted U.S. growth at 3 percent. But the U.S. economy slumped in late spring and summer after fears that the European debt crisis would spread rattled investors and businesses.

Growth is expected to be even slower in the Euro Zone where the IMF forecasts the average economic growth among the 16 nations that use the euro as their currency will be 1.7 percent this year and 1.5 percent next year.

The keys to the newfound resiliency of the Latin American and Caribbean region were more sound monetary policies and better debt and fiscal management, the World Bank said.

But a growing connection to emerging Asian economies — especially for South American countries, Costa Rica and Panama — and the region’s evolution from a net debtor to a net creditor to the rest of the world were also big factors.

“The current pace of economic recovery is exceeding expectations with [gross domestic product] projected to grow in the 5 to 6 percent range in 2010,” the World Bank said.

But the World Bank pointed out that not all regional countries will share in the growth. In addition to Brazil — Florida’s top trading partner — the best performers this year are expected to be Argentina, Peru, Paraguay and Uruguay. Chile, Colombia, the Dominican Republic, Mexico and Panama are expected to grow in the 4 to 5 percent range.

But Nicaragua, Honduras, Guatemala, El Salvador and Trinidad and Tobago are expected to show weaker growth, and the economies of Haiti, Jamaica and Venezuela are expected to shrink.

In Did Latin America Learn to Shield its Poor from Economic Shocks? — another World Bank report released Wednesday — researchers said the rise in poverty in the region was lower than anticipated in the 2008-09 crisis and less significant than in previous slumps.

Initial estimates as the economic crisis was picking up steam a year ago predicted that people classified as moderately poor in the region would increase by 10 million.

Instead, research from 11 countries covering almost 70 percent of the region’s population show that the moderately poor increased by 2.1 million people in 2009, compared to 2008, and those in extreme poverty increased by 2.5 million.

But both the World Bank and the IMF said risks remain as the global economy tries to rebalance itself.

The U.S., for example, is trying to stimulate its economy by keeping interest rates low, thus allowing the dollar to depreciate, spurring exports. But exchange rate policies in China — where the U.S. contends the currency is manipulated to maintain trade advantages — and other emerging economies may accentuate trade tensions between the U.S. and emerging nations, the World Bank said.