" The world of forking paths – Latin America and the Caribbean facing global economic risks " is the title of the report IADB released during its annual meeting in Montevideo this month. The report has projected different global scenarios and their possible impact on Latin America. They have also given some policy recommendations to the Latin American governments.
The major factors which will impact the region are: commodity prices, Chinese growth, European crisis, inflow of capital, the role of foreign and particularly European banks in the region and US recovery. A deceleration of Chinese growth is likely to affect producers of metals more than producers of grains.
The report concludes, " while the world is one of forking paths and it is impossible to know which alternative will become a reality, Latin America has good reason to be optimistic thanks to the new set of tools it has developed and the experience it has gained deploying them effectively". This is based on their following assessment:
-The region has made substantial economic progress both in terms of growth and in the ability to respond to external shocks.