Economic Survey of Latin America and the Caribbean 2001-2002

image of Economic Survey of Latin America and the Caribbean 2001-2002

This survey consists of two distinctive parts. The first part examines main aspects of the regional economy, while the second part contains an analysis of the individual countries in Latin America and the Caribbean. The part on the regional economy covers the situation in the first semester of 2002 and the prospects for the year as a whole. It also analyzes various aspects of the regional economy in 2001, including macroeconomics policies and reforms, the performance of the internal economy, and the external sector. The part on individual countries covers 20 nations in Latin America and the English-speaking Caribbean. It covers the period 2001 and early 2002, revealing country reports with tables and figures showing main economic indicators.




The Chilean economy's growth rate slackened from 4.4% in 2000 to 2.8% in 2001. The worldwide economic slowdown dealt a severe blow to the terms of trade, which fell by 8.7%, with the result that national income decreased by 0.5%. Indeed, the external environment in 2001 was one of the worst the country had faced since the mid-1980s: according to official estimates, copper and petroleum prices and dwindling inflows of external capital resulted in a loss of income on the order of seven percentage points of GDP in comparison to what would have been expected in a "normal" year. Average growth for 1998-2001 was 3%, which contrasts with the average of nearly 7% recorded between 1986 and 1997, while the 12-month inflation rate was 2.6%. The external deficit amounted to 1.2% of GDP and the public deficit to 0.3% of GDP. Despite harsh international conditions and the stagnation of domestic spending, an exchange-rate hike and the reduction of the interest rate set by monetary policymakers created monetary conditions that will undoubtedly have a reactivating effect in the medium term. Nonetheless, the real interest rate applicable to most firms remained very high, thus reflecting the difficulties involved in passing on rate cuts to the credit market.


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