By Judith Ugwumadu | 12 January 2015

Latin America and the Caribbean nations should prioritise reforms and investments that will ensure strong and inclusive growth over the long term, the Inter-American Development Bank has suggested. 

The bank said economic growth in the region is expected to pick up modestly to 2.2% in 2015, up from 1.3% last year – its lowest rate since last decade’s global financial crisis.

However, with sluggish global growth, falling commodity prices and limited fiscal space, Latin America and the Caribbean has been urged by the bank to undertake a series of reforms to maintain economic growth.  

‘Now, more than ever, the answer lies in internal sources of growth, which brings us up against a huge challenge: increasing productivity,’ said Inter-American Development Bank president Luis Alberto Moreno.

‘This factor explains why the region continues to trail behind other regions of the world.’

Listing a series of reforms to ensure sustained and inclusive growth over the medium and long term, Moreno called on the region to upgrade its infrastructure and public services and improve the poor quality of education and low levels of innovation in it productive activities.

He added that safeguarding social gains achieved over the past few years would be critical to ‘maintaining its gains against poverty’. Poverty has dropped to historically low levels (27.6% in 2014), he said.

Countries in the region were also urged to closely monitor their labour markets and social welfare programmes and reduce the risks posed by natural disasters.

In 2014, the bank approved more than $13bn allocated to projects involving institutional development (43%), infrastructure and the environment (38%), social sectors (16%), and trade and regional integration (4%).

Last week, the OECD said reforms recently carried out in Mexico had the potential to boost growth and reduce poverty, but added that a concerted effort was needed across all levels of government if this was to be achieved.