World Bank's relevance in Latin America wanes as region continues economic growth and Bank of the South presents emerging competition
18 October 2007
Continued macro-economic prosperity in Latin America furthers decline in World Bank relevance in the region as worries grow about competition with Bank of the South.
The World Bank’s chief economist for Latin America and the Caribbean Augusto de la Torre stated that the region is expected to grow between 4.9 and 5% amidst the arrival of a new regional financial institution in the Bank of the South.
According to mercopress.com, de la Torre cautioned that slower than expected growth in the US may still have an effect on Latin America. The impact from the US will most likely be “subdued” however, given the advantages experienced by Latin American economies. Such advantages include “systems geared to control the rate of inflation and greater exchange rate flexibility” making countries better equipped to absorb external shocks.
This prediction for further economic growth in Latin America coincides with the arrival of the Bank of the South, the World Bank's new regional competitor. Consisting of Venezuela, Bolivia, Ecuador, Uruguay, Argentina, Paraguay, Brazil with Colombia recently stating its interest in joining, the Bank of the South has become a reality and is scheduled to be launched in November.
World Bank Vice president for Latin America Pamela Cox took a positive stance when discussing the arrival of the Bank of the South, echoing de la Torre’s belief that the new institution would be a “complementary” actor in the region and that the World Bank was willing to assist them if they asked. Despite the prospect of the World Bank’s declining relevance in the region, Cox insisted that there was “room for all of us because the region still lacks financial resources”.
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