BY MIMI WHITEFIELD
mwhitefield@MiamiHerald.com

When the U.S. economy is mired in deep recession, an economic tsunami generally washes over Latin America and the Caribbean.

But this time the worst recession in seven decades only caused a wave that rippled across the region in 2009, said economist Manuel Lasaga. And, in most cases, the wave wasn't strong enough to knock anyone down.

The region weathered the worldwide economic crisis largely without the inflationary spirals, debt defaults, bank collapses, capital flight and currency devaluations of the past.

Institutional and policy reforms have helped create an "economic immune system'' for the region, said Augusto de la Torre, the World Bank's chief economist for Latin America and the Caribbean.

"It's almost like the United States and Latin American switched places,'' said Lasaga, president of Miami consulting firm StratInfo. "This time Latin America is the region with the good economic indicators.''

And indeed, this will be a year of growth for Latin America and the Caribbean. Consolidating economic gains that began in mid-2009, regional economies will grow an estimated 5.2 percent, according to the Economic Commission for Latin America and the Caribbean, whose Spanish-language acronym is CEPAL.

"Growth is higher than had been expected,'' said Alicia Bárcena, executive director of CEPAL, when the organization released its 2009-2010 Economic Study.

What has happened since previous economic meltdowns in the United States is that countries across Latin America have undertaken sounder economic policies, cut deficits, cleaned up public accounts, reformed central banks, built up international reserves needed for purchases from abroad and managed to keep inflation relatively low.

The China effect also helped: Stellar Chinese growth has spurred a ravenous appetite for commodities and raw materials that Latin American produces -- everything from oil, timber, natural gas, copper and iron ore to soybeans and grain. And China has been investing heavily in the region to ensure commodity supplies keep coming.

Regional growth averaged 5.3 percent between 2003 and 2008, and the boost from the 2001-2008 commodity boom provided momentum well into the recession.

But the economic gains aren't across the board. There are clear winners -- Brazil, Peru, Uruguay and Panama, for example -- and clear losers such as Haiti and Venezuela.

The World Bank also projected that the recession would thrust about 12 million people across the region into poverty and cost about 1 million their jobs. But when the figures are finalized, they could be lower, said de la Torre.

Still, the fallout from the recession is expected to erode some of the gains made between 2002 and 2008 when 60 million left the ranks of the poor.

Soccer-crazed Brazilians may have been momentarily depressed about exiting the World Cup so early this summer, but they're not crying over the economy. CEPAL projects the Brazilian economy will grow about 7.6 percent this year -- although current government projections are slightly less and growth slowed a bit in the second quarter.

Brazilian Minister of Finance Guido Mantega called that slight deceleration ``healthy'' and said the economy was growing at a sustainable pace. "Investment is increasing at a rate three times faster than GDP, which guarantees economic expansion without generating inflation,'' he said in a statement.

And as work begins on various infrastructure projects related to the 2014 World Cup, which Brazil will host, and the 2016 Olympics, which will be held in Rio de Janeiro, things are expected to get even better.

Between now and 2016, the federal government plans to invest $6.3 billion in transportation infrastructure, $3.1 billion in airports, and $420 million in upgrading ports. Local governments plan to spend $2.1 billion to build and upgrade stadiums for the World Cup.

"Emerging-market investors love Brazil,'' said Riordan Roett, a Brazil scholar who heads the Western Hemisphere Studies Program at Johns Hopkins University's School of Advanced International Studies.

In the past 15 to 16 years, he said, the Brazilian economy has undergone a tremendous transformation. Brazil's recent oil finds, sound fiscal policies and investments leading up to the sporting events will boost the nation's economy and create tens of thousands of jobs in coming years.

This summer Brazil launched a push for tourists to visit Latin America's largest country before the sporting extravaganzas with a new $30 million tourism campaign.

But a strong real, which makes vacations expensive for American visitors, isn't cooperating. ``Strong currencies signal success, but if they become too strong they can undercut competitiveness in exports'' and other areas such as tourism, said de la Torre.

Ricardo Hamond, owner of Jeep Tours, which takes tourists on jaunts through Rio de Janeiro and the Tijuca rain forest, says his business is down from five years ago when the exchange rate was 3.5 reais to $1.

Now it's around 1.72 to $1, making a Brazilian vacation considerably more expensive for foreign visitors.

But he's added more paragliding and adventure tourism offerings that have proved popular with younger travelers.

Still, he expects a boost in business as the World Cup and Olympics approach. "It's going to be very good leading up to the events and we know there will be lots of business afterward,'' he said.

If Brazil represents the country with the best economic prospects in the near term, then Venezuela is among those with the most shaky. CEPAL estimates the Venezuelan economy will shrink by 3 percent. During the first quarter, there was a 5.8 percent decline.

Many business people describe a dysfunctional business climate.

Currency controls in Venezuela have stymied imports and some items are impossible to find at any price.

Eramo Acosta, 58, a Caracas cab driver, said some of his colleagues recently returned their newly purchased cars because there were no spare parts available for them in the local market. Without the parts, insurance companies would not provide coverage, he said.

"It doesn't make any sense,'' he said, "but that's the way it is.''

Lasaga sees a vicious cycle developing in Venezuela: "There's a lot of economic uncertainly in Venezuela. Uncertainty encourages people to take their money out and invest in dollars, and then the more the government tries to tighten the screws, the more money tends to go elsewhere.''

A maxi-devaluation is probably inevitable, he said, and that will encourage an inflationary spiral.

The devaluation of the bolivar earlier this year has eased pressures on those who have access to dollars, but rising prices are still causing widespread pain.

Cleo Palomino, 54, sells clothes and accessories at the Huacaipuro market in Caracas. While the government regulates prices of certain basic goods, inflation has been eating away at her bottom line.

A pair of pants that cost 90 bolivares just a few years ago, now cost 180 [$42 at the official exchange rate.]

"There's no cash flow and everyday we are getting poorer,'' she said. "Everybody is hurting.''

She said she doesn't believe the government's statistics that put annual inflation at around 30 percent -- the highest in Latin America. She thinks it is even higher: "Just look at medicine; there prices have double or tripled.''

Inflation also is climbing in Argentina, threatening to derail a tourism boom that began several years ago when the South American country offered some of the best deals in the hemisphere.

In July, inflation rose 11.2 percent from a year earlier -- the highest level since May 2006, according to the National Statistics and Census Institute. But private economists say the inflation rate may be higher.

The weak peso encouraged visitors attracted by cheap steak dinners and real estate bargains a few years back. But even though the peso has declined this year (trading at around 3.95 to $1 U.S. last week), annual inflation of nearly 25 percent means Argentina isn't quite the bargain it once was.

Some economists say the Argentine economy is overheated and growth needs to be slowed. Morgan Stanley recently more than doubled its forecast for Argentine growth to 9.7 percent. That would be the fastest expansion in nearly two decades. CEPAL projects annual growth at 6.8 percent.

But Lasaga believes Argentina needs a correction: "Not only is inflation accelerating but President Fernandez hasn't seemed able to get the confidence of investors.''

Haiti, perennially the poorest country in the hemisphere, got walloped by a devastating hurricane that will cause the economy to contract by an estimated 8.5 percent.

Even though an 8.8 magnitude earthquake also shook Chile this year, the South American country has been able to manage its recovery more successfully. The Central Bank says the economy grew by 4 percent during the first half of 2010 and it expects growth for the year to range between 4.5 percent to 5 percent.

Factories also are ramping up production -- reflected by the fact that Chilean imports were up 49 percent in August from a year ago, the bank said.

Chilean Labor Minister Camila Merino said about 250,000 new jobs will be created and expects the jobless rate to fall below 8.9 percent.

In general, the recovery is expected to be strongest in South America and weakest in the Caribbean, which is heavily dependent on tourism and trade with the United States and Europe. Several countries -- Grenada and Barbados among them -- also have high levels of debt.

Countries that are expected to make the most solid gains this year have seen an increase in credit and investment.

Brazil, for example, is using its back-to-back sporting events to jump-start highway, airport and port improvements that have been stalled for years.

"The way we see the World Cup and the Olympic Games is as an opportunity to take these projects off paper and make them reality,'' said Felipe de Faria Góes, secretary of development for Rio de Janeiro. "We're implementing existing plans that the city has had for many years. Now we have the support and resources for it.''

Despite the positive outlook for the region, prospects for a sustained recovery still depend on how the global economy performs. As speculation about double-dip recession in the United States -- or at least slower growth in the second half of the year -- persists, the outlook isn't entirely clear.

The country most susceptible to fallout from a shaky U.S. economy would be Mexico, wrote Jimena Zuniga in Barclays Capital Emerging Markets Weekly. "It would be starkest in Mexico, which continues to send more than 80 percent of its exports to the U.S.''

But de la Torre said even if there's another downturn, the region will still do better than it did during the days when an economic wobble in the United States could derail its economies.

Miami Herald Staff Writer Jim Wyss contributed to this report.