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Milano Looks at Latin America, Where Recovery Has Already Taken Hold

, by Antonella Mori, ISLA Center for Latin-American Studies and Transition Economies, translated by Alex Foti
From Lima to Rio, Latin America is navigating the crisis with unprecedented ease. In December, an important international conference will discuss the Italian state of relations with the South American continent

Building on the success of the third edition held in Rome, in early December 2009 Milan will be hosting the 4th Italy – Latin America Conference, organized by the Italian Foreign Ministry in collaboration with various institutions, including ISLA, Bocconi's research center on Latin American economies, which will coordinate the conference in Milan. The Italy – Latin America Conference is the main forum of discussion for the development of economic relations between the Peninsula and South America. At the conference in December, many issues will be on the table: from infrastructural investments to development banks, from bi-regional alliances to cultural cooperation. The conference will also highlight Italy's contribution to the EU-LatinAmerica summit that will take place in Spain in May 2010.
Latin American countries want to strengthen relations with Italy also due to their comparatively favorable economic situation. In fact, the countries of the region are already recovering from the current recession. It's true that IMF estimates say that, after six years of uninterrupted growth, Latin American GDP shrank in 2009 (-2,5%), but that it will rebound to a healthy +2.9% in 2010 (World Economic Outlook, October 2009).
With respect to past crises, Latin America has navigated the global recession surprisingly well: no banking crises, rush devaluations, debt moratoria, bouts of hyperinflation, or massive capital flight. The healthy macroeconomic situation established prior to the recession has provided room for timely countercyclical measures, and financial regulation and supervision have significantly improved.Still, significant cross-country differences persist. Peru and Uruguay will post positive growth rates in 2009, while Mexico has been hit hardest by the crisis (-7.3%), due to the severity of US recession. Many countries in Central America and the Caribbean have suffered from drops in remittances and tourism flows.
However, the economic crisis has inflicted a heavy human and social toll: almost 8 million Latin Americans have fallen into poverty. If recovery is as fast as forecasted, this setback in the fight against poverty will prove temporary. In fact, in the 2003-2008 period almost 60 million people managed to climb out of poverty in the region.

Since the second quarter of 2009, Latin America has started to recover from the crisis: industrial production has been growing in several countries, especially Brazil; Mexico has gotten out of the slump; indicators of business and consumer confidence are back on the sunny side again; foreign capital inflows have increased and interest rate spreads have shrunken.

December's conference in Milan will be an important opportunity to seize the momentum of Latin American recovery, and strengthen economic relations between Italy and Latin America.

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