FT.com / World / Americas Wednesday Dec 24 2003. All times are London time. Roger Bove Edit Profile Take a tour Log out Home World US UK Europe Asia-Pacific Middle East &amp; Africa Americas International economy Brussels briefing News headlines News in depth Business Markets Markets data &amp; tools Industries Lex Comment &amp; analysis Technology Management Your money Arts &amp; Weekend Sport Jobs &amp; classifieds In today's FT FT Reports Creative Business FTfm FT-IT World reports Business reports News in <a href="/keyword/depth-rebuilding-iraq/" >depth rebuilding iraq</a> WMD guide Science briefing China Terror Columnists Martin Wolf Lucy Kellaway Philip Stephens Quentin Peel Lombard Gerard Baker Amity Shlaes World / AmericasPrint article | Email Latin America has first surplus in 50 years By Richard Lapper, Latin America Editor, in Sa~o Paulo Published: December 17 2003 19:58 | Last Updated: December 17 2003 19:58 The region of Latin America and the Caribbean has recorded its first current account surplus for 50 years, as strong increases in demand from Asia and the US and higher commodity prices pulled its economies out of recession. Preliminary figures for 2003 from the United Nations Economic Commission for Latin America (Ecla) show output expanded by 1.5 per cent in 2003 after a contraction of 0.4 per cent in 2002. Relatively rapid growth of 7 per cent in Argentina and more than 3 per cent in Chile, Peru and Colombia helped offset the effect of a 9.5 per cent contraction in Venezuela and a sluggish performance by the region's two biggest economies: Mexico (up 1.2 per cent) and Brazil (up 0.1 per cent). Chinese demand for commodities such as iron ore, soya and copper has been a big factor in the strong trade performance. The trade surplus of $41bn (?33bn, 23bn) was a record. Overall commodity prices rose by 15.9 per cent, with significant increases in oil, soya, copper and gold. However, the report indicated that the continent's domestic performance was less impressive. After six years of stagnation, income per head is lower than it was in 1997 and 44.4 per cent of Latin Americans - some 227m people - live below the poverty line. Officially, measures of unemployment fell slightly but more than one in 10 of the workforce are jobless. The report suggests there will be an average rate of growth of 3.5 per cent in 2004. Argentina is expected to grow by 4.5 per cent, Brazil by about 3.3 per cent and Mexico by 2.8 per cent. Growth in the US, Asia and stronger demand for commodity exports will again be the decisive factors. The report noted that low savings rates remain one of the biggest obstacles to faster growth. Gross capital formation was unchanged - and is more than 12 per cent lower than five years ago. Flows of foreign direct investment fell to reach $29bn, compared with an average of $38bn between 1990 and 2002. The report also highlighted the importance of workers' remittances, with flows of $33bn reflecting a particularly heavy contribution from Mexicans and Central Americans living in the US. The report is positive on the improvement in fiscal and monetary management across the region. After exchange rate crises in Mexico during 1994-1995, Brazil in 1999 and Argentina in 2001, virtually every country in the region - Venezuela being the main exception has a flexible exchange rate. Tight fiscal policies - most countries are running primary fiscal surpluses (before taking into account financing costs) - and careful monetary management have brought annual inflation down to single figures in most countries. EMAIL THIS PRINT THIS MO...