Latin America can be the solution to supply problems and reallocation of jobs from other regions. The statement was made this Tuesday (7) by Mauricio Claver-Carone, president of the Inter-American Development Bank (IDB), during the Americas Summit.
“Latin America and the Caribbean, whether manufacturing in Asia, food and energy in Europe, can be a solution to these supply problems,” said the executive attending the Summit of the Americas because of the resources and opportunities it offers. Los Angeles, referring to the war in Ukraine, which produces grain and fuel for the world,
“The point is to improve infrastructure,” thought Claver-Carone, noting that Latino central banks “set an example in getting ahead of the US Federal Reserve” and are taking measures so that “inflation doesn’t surprise them.”
The manager explained that since the Russian war in Ukraine, country risk has decreased for all countries in the region except Argentina, El Salvador and Bolivia, while China has increased. “This has never happened in history,” he said.
‘close shoring’
All of this motivates investors to view this region as a “close-shoring” or attraction that is seen as closer or more suitable for transferring their business from one country to another.
According to Claver-Carone, “Every day we see examples of companies wanting to move from Asia to Latin America and the Caribbean”, projects that IDB also finances. Yes, there is political dissonance and populism on the left and the right, but there is a consensus among the business community about handing over their operations,” he said.
Claver-Carone explained that his stance is “pro-Latin America and the Caribbean, not anti-China.” According to IDB calculations, the potential gains from Latin America and the Caribbean’s nearshore opportunities could represent an increase in exports of new goods and services of up to US$78 billion.
A bipartisan group of senators on Tuesday presented a resolution calling for greater support for reconnection and near-shore initiatives to “re-allocate global supply chains in the United States and with our regional allies in the Western Hemisphere.”
The resolution highlights “risks to the national security and economic well-being of the United States” if it continues to “disproportionately rely on supply networks located exclusively or primarily in China”.
financing
Claver-Carone reminded that in 2021, IDB set funding records in the region with $23.5 billion, doubling the organization’s usual average. Both IDB and its private sector arm, IDB Invest, participate in these operations.
The Joe Biden administration announced that, given the central role of the private sector, the Inter-American Bank will propose “ambitious reform” “to better address the region’s development challenge”.
“An increase in US capital participation in IDB Invest will send an important message of support to the region and increase impact investments in areas such as near-shore, digitalisation, climate and renewable energy,” said Claver-Carone.
The World Bank cuts its growth forecast
The World Bank sharply cut its global growth forecasts for this year due to the war in Ukraine and warned of the risks of “prolonged low growth and high inflation”, especially for low-income countries.
The Washington-based institution is now projecting a 2.9% increase in global gross domestic product (GDP) from an estimate of 4.1% in January.
“The result is an increased risk of stagflation,” he added, referring to the combination of high inflation and economic recession. This slowdown follows a sustained recovery in 2021 (+5.7%) after the deep recession caused by the Covid-19 pandemic.
World Bank economists expect this rate of growth to continue into 2023-2024, with the war in Ukraine impacting activity, investment and trade in the short term. This is in addition to weakening demand and the gradual lifting of state aid measures.
“Due to the combined damage of the pandemic and war, the per capita income level in developing countries will be approximately 5 percent lower than the predicted trend before Covid-19 this year,” the statement said.
(with information from AFP)
source: Noticias
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