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LatAm growth will depend on Europe, China: IDB
by Staff Writers
Montevideo (AFP) March 18, 2012

Economic growth in Latin America is expected to hold strong in 2012 at a 3.6 percent average if Europe avoids a deep recession and China maintains steady growth, the Inter-American Development Bank said Sunday.

A report released for the 53rd meeting of the regional development bank said the main risks for the region would be a worsening of the European debt crisis and a deceleration in China.

"We are cautiously optimistic for Latin America and the Caribbean. The region has grown strongly in the last couple of years and it has shown it is resilient to shocks," said Santiago Levy, an IDB vice president.

"Most importantly, the region has developed a set of policy tools that have proven to be effective during economic downturns."

Though most forecasts do not anticipate a major crisis in Europe or a strong slowdown in China, "the world is quite uncertain right now -- it really is one of forking paths," said Andrew Powell, a coordinator of the report.

"Our report shows that resilience has increased for the region but certain vulnerabilities remain and may limit the scope for countercyclical policies if the crisis were to worsen in Europe."

The report said the region's dependency on commodities remains high and a surge in capital inflows has increased some vulnerabilities. The presence of a large number of European banks could make the region's banking sector vulnerable to a credit squeeze if the crisis in the eurozone worsens, it said.

If Europe's woes persist into 2013, that could deal a blow to major economies in the region such as Brazil and Mexico, it said.

But the report said most of the larger economies in the region have adopted flexible exchange rates to help weather a global crisis, and many have taken steps to slow currency appreciation, "which have all enhanced the region's resilience against another possible international financial crisis."

The International Monetary Fund said in its report last September that Latin America and the Caribbean would see 4.0 percent growth in 2012 thanks largely to commodity exports and despite slow global growth. But since then the outlook has worsened.

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China to join in $1 bn LatAm investment fund
Montevideo (AFP) March 19, 2012 - China will join the Inter-American Development Bank to create a $1 billion fund for Latin American investments, IDB president Luis Alberto Moreno announced Monday.

Moreno, speaking after the 53rd annual meeting of the organization, said the program would be "a fund which we will create with the Chinese government" for the region.

An IDB statement said the goal is to promote "equity investments to promote sustainable economic development in the region."

The investment fund is expected to be operational this year following a letter of intent signed between the IDB and China Eximbank in 2011.

"This new platform will promote stronger investment ties between China and Latin America and the Caribbean, helping our region overcome some of the most important development challenges," said Moreno.

The IDB and China Eximbank will each put $150 million into the fund and will select "internationally recognized asset management firms to manage the investments and raise funds from the markets," a statement said.

China is already a major economic partner with many Latin American economies, particularly Brazil. The IDB is the main multilateral lender to the region, having provided $11 billion last year.

The new effort shows "the enormous interest China has for the Latin American region," Moreno said.

Sources familiar with the project said the effort would seek to invest in companies in the region, differing from IDB credits, which go mainly for development and infrastructure.

Separately, Moreno said the organization hopes to come up with plans in April for a so-called contingency fund to help countries in the region hit by global economic turmoil.


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Singapore banker held in China without lawyer access: fiance
Beijing (AFP) March 19, 2012
Police in China have held a Singaporean banker for two weeks without allowing her access to a lawyer after her client allegedly fled the country with millions of dollars, her fiance said Monday. Eden Wu, who has worked in Shanghai for Standard Chartered's private banking business for nine months, was detained on March 6 as she prepared to travel to Singapore for her wedding, Jason Tan told A ... read more

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