Labour Overview 2005. Latin America and the Caribbean (First Semester Advance Report).

The Labour Overview Advance Report for 2005 conveys a mixed message with respect to the current economic and labour market situation in Latin America and the Caribbean. In general, there are reasons for cautious optimism as regards the region’s economic growth. At the same time, despite favourable economic conditions, progress is modest compared with the need to reverse the decent work deficit that has accumulated since the 1990s.

Economic growth in the region, estimated at 4.6% in the first semester of 2005, points to GDP growth of approximately 4% for the year. Although this rate is lower than that recorded in 2004 (5.9%), it remains higher than the average for recent years. These results reflect the favourable international context characterized by the expansion of global GDP and trade, high prices for primary export products, low interest rates, a reduced rate of inflation and relatively low inflationary pressures, although in some countries inflation rates surpassed 2004 levels. Also contributing to the economic growth was the adoption of flexible Exchange rates that fostered an increase in the competitiveness of the region, as well as countries capitalizing on positive economic conditions to strengthen fiscal balances and reduce foreign debt. These changes resulted in a notable reduction in country risk indices, which are approaching historic lows, and a surplus in the current account recorded in the past two years which will likely continue in 2005.