ECLAC -- June 11, 2009--  The steep drop in domestic and external demand during the fourth quarter of 2008 and the first quarter of 2009 has impacted Latin American and Caribbean economies, prompting ECLAC to estimate GDP in the region to fall -1.7% in 2009.

Unlike earlier crises, this time, countries are facing the crisis with less debt and greater international reserves, with financial systems that are relatively less vulnerable to external turbulence. For these reasons, it is not financial problems that have impacted the region more swiftly and deeply.

The strongest impact is in the real economy. During the latter part of 2008 and the first few months of this year, there was a significant decrease in international trade flows, deteriorating terms of trade, and diminishing remittances, all factors that had pushed up regional growth in recent years.

Added to this were a high degree of uncertainty about how the crisis would evolve and worsening expectations of economic recovery. Later came the effects of the A(H1N1) influenza outbreak on economic activity in certain countries, especially in tourism, a sector that was already experiencing a significant drop in tourists from developed countries.

ECLAC expects economic recovery in the region to commence during the latter half of 2009, but from much lower growth levels than those seen in the first half of 2008.

On July 15, ECLAC will release its Economic Survey of Latin America 2008-2009 , which includes a detailed analysis of the evolution of the Latin American economy, at a regional and country level.