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Issue Guide: Latin America and the Global Financial Crisis

May 2009


The financial crisis had a stark but varied effect on Latin American countries. The economies of major oil exporters like Venezuela and Mexico were buffered as prices rose through the early part of 2008. The oil price slump during the second half of the year had the reverse effect. Brazil, Argentina, and Ecuador were beset, to a lesser degree, by similar problems. Venezuela was forced to pare back its regional spending, which had been made possible in large part through commodity exports. Meanwhile, equity prices fell across Latin America as hedge funds and other institutional investors cashed out of investments in emerging markets. The region's economies were dampened more generally by declining import demand from the world's leading economies, including the United States. Some Latin American countries, perhaps most notably Argentina, also faced severe inflation problems and saw their sovereign debt ratings lowered by ratings agencies. But fiscal reform in some countries--Brazil, Colombia, Peru, and Chile--put them in far better shape to weather the crisis than they were during the emerging markets crisis of the late 1990s. On the international stage, Latin American policy priorities were scattered as of early 2009. Ahead of the April 2009 G-20 summit, the three Latin American countries in attendance spoke out on different policy points. Argentina urged a relaxation of some IMF rules. Mexico pushed for trade openness, particularly given simmering trade disputes with the United States. Brazil, experts say, sought to establish its position as a leading voice for the developing world.

The following is a list of resources providing background on Latin American economic models and analysis on how they are coping with the downturn.