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Latin America can be a solution to the global supply crisis, points out IDB

Latin America can be the “sea of ​​peace” that investments need in the midst of global turmoil, both to solve supply problems and to relocate businesses from other latitudes, the president of the Inter-American Development Bank (IDB) said on Tuesday. ), Mauricio Claver-Carone

Due to the resources and opportunities it offers, “Latin America and the Caribbean can be a solution to these supply problems, whether manufacturing in Asia or food and energy in Europe”, a product of the military conflict in this region, which provides grain and fuel. to the world, the executive, who is taking part in the Summit of the Americas in Los Angeles, told AFP.

“The issue is to improve the infrastructure”, considered Claver-Carone, noting that the Latin central banks “have been exemplary in getting ahead of the American Federal Reserve” and taking measures so that “inflation does not take them by surprise”.

The executive explained that, “since the Russian war in Ukraine, for all countries in the region, with the exception of Argentina, El Salvador and Bolivia, the country risk has decreased”, while that of China has increased, which means that they have decoupled. “This has never happened in history,” he pointed out.

All this motivates investors to see this region as an attraction for “nearshoring”, or transferring their business from one country to another, which is closer or more convenient to them.

According to Claver-Carone, “every day we see examples of companies that want to move from Asia to Latin America and the Caribbean”, projects that the IDB also finances. “Yes, there is political discord, populism from the left and the right, but there is a consensus among the business community to transfer its operations”, he said.

Laver-Carone clarified that his position “is not anti-China, but pro-Latin America and the Caribbean”. According to IDB calculations, the potential gain for Latin America and the Caribbean from nearshoring opportunities could represent an increase of up to US$78 billion in new exports of goods and services.

A bipartisan group of senators yesterday introduced a resolution calling for more support for reshoring and nearshoring initiatives, “to reallocate global supply chains in the United States and with our regional allies in the Western Hemisphere.” The resolution highlights “the risks to the national security and economic prosperity of the United States” if it continues to rely “disproportionately on supply networks based solely or primarily in China.”

Claver-Carone recalled that, in 2021, the IDB broke funding records in the region, with 23.5 billion dollars delivered, doubling the entity’s usual average. Both the IDB and its private sector arm, IDB Invest, participate in these operations.

The Joe Biden administration has announced that it will propose an “ambitious reform” of the IDB “to better address the region’s development challenge, as the private sector plays a central role.” “An increase in US equity participation in IDB Invest would send an important message of support to the region and increase impact investing in areas including nearshoring, digitalization, climate and renewable energy,” said Claver-Carone.

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