Latin America to Scoop Up Far More Direct Investment Cash in 2005

Latin America has won back a considerable chunk of the investment confidence it lost last year and chances are there´ll be a major cash flow in the course of 2005, according to a research study presented by Dresdner Bank Lateinamerika, a German bank.

The report entitled Perspectives for Latin America in 2005 called the ongoing raise of foreign investment in the region impressive. All in all, the region is expected to grab roughly $50 billion in direct investments, up a blistering 60 percent from 2004.

Improved policies and strong leadership in Latin America explain why the region´s economies have improved in recent years, says John Taylor, the U.S. Treasury Department´s under secretary for international affairs.

Taylor spoke April 10 in his role as the U.S. temporary alternate governor at a meeting of the Inter-American Development Bank (IDB) in Okinawa, Japan. He said economic reforms in the region have built financial stability and confidence, "leading to increasing capital flows, higher levels of investment, and rapid export growth."

Continued economic expansion in Latin America is expected, Taylor said. Private forecasters foresee growth of 4 percent in 2005, following growth of almost 6 percent in 2004, the region´s fastest growth in 25 years, added Taylor, who delivered his remarks at the April 10-12 IDB Board of Governors´ annual meeting in Okinawa.

Taylor said Latin America´s improved economy is "good news, but we all know the region can and should do better." He indicated that decades of sustained high growth are needed to bring down high poverty rates in Latin America.

The region faces two major challenges for sustained growth, Taylor said. The first challenge, he argued, is to "lock in" recent improvements in macroeconomic policy by putting in place "fiscal-responsibility regimes that discipline budget planning and execution" and by supporting what have proven to be "successful low-inflation monetary policies."

The second challenge, Taylor said, is to concentrate on "microeconomic reform, including trade liberalization and the reduction of burdensome regulation, in order to unleash job creation by entrepreneurs both small and large."

Taylor said the United States intends to work hard to help ensure that the November 2005 Summit of the Americas in Argentina improves the lives of people in Latin America and the Caribbean.

The United States, he said, is working to ensure progress on such goals as expanding small-business lending, reducing the time to start a business, promoting "high-return infrastructure growth," and reducing the costs of sending remittances (money transfers) by migrants working in the United States to their families back home in Latin America and the Caribbean.