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The global economic crisis and Latin America

19 March 2009

 

On Monday 16 March, key DFID policy makers met with organisations including Oxfam and Christian Aid to discuss the impact of the global economic crisis on Latin America.

The meeting came only days after International Development Secretary Douglas Alexander spoke of the need, ahead of April's G20 summit, to safeguard the word's poorest people from the effects of the downturn.

In Latin America, recent years have seen steady improvements towards achieving the Millennium Development Goals (MDGs) and reducing poverty and inequality. However, the current economic crisis means there is now a strong likelihood of progress being halted - and even reversed - in some of the region's countries. Some could even drop from "middle-income" to "low-income" status.

  Photo of two older people from BoliviaOlder people from Cochabama, Bolivia. The income security of the elderly is at major risk in the current economic climate. Photo credit: Help Age/Tom Weller

"Until mid-2008," said Oxfam's Duncan Green at the meeting, "there were hopes that Latin America’s increasingly diversified trade, reduced dependence on aid and debt, and improved macroeconomic management would insulate it from the gathering storm in the US and Europe. Such hopes have proved forlorn."

Impacts on the ground

 

Representatives from 12 civil society organisations (CSOs) working in Latin America were in attendance at the London meeting, among them Claire Kumar, from Christian Aid, who pointed to the impacts already being felt across the region as the crisis deepens. In countries such as Guatemala and Honduras, child malnutrition rates are on the increase as families are forced to reduce their expenses. And in rural areas, farmers are beginning to sell essentials like machinery.

Concerns were also voiced about the worsening employment situation, declining credit availability from banks, and falling remittances. In addition, health and education could suffer as a result of cutbacks in government spending, and in the private sector, there are fears that agricultural exports and textiles trades, in particular, may come under threat.

  Photo of infants in Guatemala receiving an evening mealIris, Myra and Alba receive an evening meal of mashed high-protein beans at Christian Aid partner Bethania’s specialist infant malnutrition clinic. Guatemala has one of the highest child malnutrition rates in the world. Image credit: Christian Aid/Sian Curry

Governments and donors could help to tackle these impacts, the CSOs suggested, by investing more in domestic markets and those sectors (like agriculture and textiles) in which poor people are more likely to be employed. Support should also be provided to small businesses, while social protection programmes (such as cash transfers to the very poor) should be expanded. They also urged that levels of social spending be maintained or even increased.

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Paving the way

As well as Oxfam and Christian Aid, also in attendance on the day were representatives from ActionAid, CAFOD, CARE, HelpAge International, International HIV and AIDS Alliance, Plan International, Progressio, Save the Children, World Vision and WWF.

Each of these 12 UK-based organisations receives funding from DFID through Partnership Programme Arrangements (PPAs). As part of its commitment to fighting poverty in Latin America, DFID is increasing funding through its PPAs from £7 million a year to £13 million a year (in addition to funding through CSOs in Nicaragua). DFID will also hold policy meetings every six months to draw out lessons from the Latin American experience, in recognition of the region’s role in paving the way in innovative approaches to poverty reduction.

Read more about DFID's work with some of the CSOs in the cases studies Eco-friendly dinners in Nicaragua (Progressio), Citizens for the future in Guatemala (Plan International) and Art fights AIDS in El Salvador (Plan International).

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