Lindsay Mackoon, Freelance Writer
PORT OF SPAIN, Trinidad:
COUNTRIES IN the Caribbean and Latin America will not escape the effects of US economic slowdown, says Jose Antonio Ocampo, executive secretary of the Economic Commission for Latin America (ECLA).
Speaking at a news conference at the Hilton Hotel in Port of Spain yesterday, he, however, explained that there was a way out for the region.
The Colombian economist said ECLA had forecast a slowdown for the whole region from four per cent last year to 3.7 per cent in 2001. But, for this year, he pointed out, it was quite likely the slowdown will be "sharper and growth in the region is expected to be between three and 3.5 per cent."
"The basic reason for that is that trade links, in particular tourism, which has been one of the most dynamic activities in the 1990s, will be hurt directly by the US slowdown."
However, Ocampo saw favourable effects on interest rates for the region as a result of substantial reduction of rates by the US Federal Reserve and by other industrialised countries.
Another critical factor, he added, was Latin America and Caribbean countries "are seen as less of a risk than many new companies in the United States which compete with them for funding."
He commented on the effect of commodity prices, noting some are falling while others which Trinidad and Tobago produces, like oil and gas, are not.
He said it would be difficult to avoid the effect of the slowdown but stressed the region can learn from the experience.
"In the medium term," he explained, "I think diversification of production structures is the basic priority for all countries in the region. The more diversified you are, the less likely you will experience the shocks."
Further, Ocampo said in some particular cases, macro economic instability may also hurt countries.
LOCAL NOTE: Minister of Finance and Planning, Dr. Omar Davies, in responding to a question from the Opposition on the effect of the slowdown in the US economy on Jamaica, in the House of Representatives on February 27, however, predicted no serious effect.
Dr. Davies said that the two areas of major concern would be bauxite/alumina and tourism. He said that bauxite/alumina projections for 2001 were that it would be the best year in the last 25. Kaiser, for example, will be back to normal with the reopening of the Gramercy plant In Loui-siana, USA.
In terms of tourism, Dr. Davies, said that from all indications the current season would be a bumper one although, he admitted, the full extent of the US slowdown had not yet set in.
He said that his main area of concern was the stability of oil prices.
