Report identifies key risks to continued rise of Latin America

Regional manifestations of global risks may shape business environment, social and economic conditions

Geneva, Switzerland, 18 April 2007 – The World Economic Forum today released its Latin America@Risk report. Produced by the Forum’s Global Risk Network, the report emphasizes the uncertainty surrounding external economic shocks, global climate change, political instability and social inequality, and its effect on regional growth and welfare.

The report notes the increasing strength and robustness of Latin America’s economies, while exploring the key economic, environmental, geopolitical and societal issues that put that progress at risk. While all four of these issues emerge from the broader global risk environment, the regional manifestations present particular challenges for governments, industry and civil society throughout Latin America.

“Global risks play out uniquely in Latin America, but also differently across the region, which is incredibly diverse,” notes the Global Risk Network’s Gareth Shepherd, co-author of the report. “But these four issues – social inequality, political instability, economic vulnerability and climate change – are on the radar of all of the region’s strategic thinkers.”

The report argues that Latin American economies are much less vulnerable to sudden disruption than they have been in past decades, thanks primarily to improved fiscal positions. But with much incremental growth arising from commodity exports, global risks such as a hard landing of the Chinese economy or rising protectionism from the United States create new challenges for the region. Fiscal discipline and counter-cyclical policies must be strengthened to build the region’s “margin of safety”.

Likewise, while democracy and political stability remain at historically high levels across the region, pockets of populist/anti-globalist storm clouds threaten to spread throughout the highly interdependent region. Meanwhile, global climate change presents serious trade-offs for the region – not least between the seizing of opportunities (e.g. aggressive expansion of biofuel production) and the management of life-sustaining resources (e.g. rainforest and freshwater).

Perhaps the region’s greatest ongoing concerns are social and economic inequalities – which remain the most significant in the world. Globalization continues to drive both real inequalities, via income stratification within the region, and perceived inequalities, as local populations observe fast growth elsewhere. Many Latin Americans continue to suspect that global prosperity is leaving them behind, a perception seemingly resistant to decreases in absolute poverty. Political reform, the encouragement of small and medium enterprises and, crucially, education, remain the region’s best mitigators of inequality-driven populist backlash.

More than 20 contributors from leading businesses, academic institutions and think tanks in the region contributed to the report, which is published ahead of the World Economic Forum on Latin America, which will take place from 25-26 April 2007 in Santiago de Chile.

Notes to Editors:
• The entire report can be downloaded here: http://www.weforum.org/globalrisks.
• Print-quality, high resolution photographs of the cover can be downloaded here: http://www.pbase.com/forumweb/latinamericarisk.
• For more information about the World Economic Forum on Latin America, please visit our website at http://www.weforum.org/en/events/ArchivedEvents/WorldEconomicForumonLatinAmerica2007/index.htm.
• Print-quality, high resolution photographs of the World Economic Forum on Latin America will be made available here: http://www.pbase.com/forumweb/latinamerica2007, while pictures from the last World Economic Forum on Latin America are here: http://www.pbase.com/forumweb/latinamerica2006.
The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas.

The host broadcaster of the meeting is Television Nacional de Chile – TVN.

Incorporated as a foundation in 1971, and based in Geneva, Switzerland, the World Economic Forum is impartial and not-for-profit; it is tied to no political, partisan or national interests (www.weforum.org).