Bank study warns of perils ahead for Latin America

The year 1979 was a relatively good one for Latin America -- at least economically. The area's growth rate edged up substantially during the year in a surprise development that registered a 6.2 percent increase. That increase compares with 4.7 percent in the 1976-78 period and 3.1 percent in 1975.

But balanced against this favorable report are four factors that the Inter-American Development Bank (IADB) argues bode ill for the region as a whole:

* Inflation has continued to eat away at the incomes and living standards of most Latin Americans. "There was a surge of inflation in Latin America in 1979, " the IADB reports, adding ominously that the picture does not appear to have much hope for change in 1980.

No longer are there any Latin-American countries with relative financial stability and inflation rates under 5 percent a year; moreover, the number of countries with moderate inflation rates between 5 and 15 percent has declined as an increasing number of hemisphere nations move into the list of those with high annual inflation rates of more than 15 percent.

* Population spirals in most countries have tended to deflate the positive economic growth rates of Latin America -- and the area has led the world in population growth during the past 30 years.

While the upward population trends in Latin America appear to be slowing slightly, the IADB reports that "massive future population gains are still assured." The high proportion of children in many countries -- half the population under 15 in some nations -- represents "an awesome potential for further large population increases, regardless of the fact that the rate of increase may be diminishing."

At the moment, the area's population is close to 400 million, and the IADB projects an increase to totals of slightly more than 600 million by 2000.

* Along with population statistic is the IADB observation that "practically all national population gains are accruing to the cities." To the bank, this situation "is awesome and shows no sign of abating." The bank notes that in 1960 -79, for example, Brazil added 49 million people to its population -- with 43 million of them in the cities and towns. A similar and accelerated trend is expected for the remainder of the century.

This pattern is expected to continue elsewhere as well, and by the close of the century, Latin America should be a region of 475 million city and town dwellers compared with approximately 220 million in 1979. This factor alone complicates every problem that the area faces. How to feed, clothe, house, educate, and find jobs for this growing legion of urban dwellers is perhaps the major social problem the are faces.

* Balance-of-payment deficits have continued to rise precipitously -- some $ 25 billion in 1979 with the prospect for 1980 of a tally, perhaps as high as $30 billion. Moreover, external debt for the region has gone up sharply. The bank has words of caution about this flow of funds from abroad.

Moreover, it notes that much of the outside funding is now coming from private sources in contrast to public sources -- a factor that increases the concern about the debt since interest rates tend to be somewhat higher from the private sector.

All these points -- and more -- are contained in the IADB's annual report on "Economic and Social Progress in Latin America," a document that many Latin Americanists regard as the essential statistical tool for knowing what is happening in the region.