Arab Today, arab today latin america an emblem of emerging markets sputter
Last Updated : GMT 05:34:53
Arab Today, arab today
Arab Today, arab today

Latin America an emblem of emerging markets' sputter

Arab Today, arab today

Arab Today, arab today Latin America an emblem of emerging markets' sputter

Latin America will be in the spotlight next week as the International Monetary Fund
Lima - AFP

After a decade of strong economic growth, Latin America and especially its powerhouse Brazil are sputtering, a symbol of the slowdown in emerging markets worldwide as commodity prices slide.

The region will be in the spotlight next week as the International Monetary Fund and World Bank hold their annual meetings in Lima, Peru bringing together finance ministers and central bank chiefs from around the world.

They will discuss a global economy that is stuck in a rut and badly missing the emerging markets boom that salvaged world growth during the 2008-2009 crisis.

With the exception of India, the emerging markets are now struggling, led on a downward plunge by long-time growth engine China.

Latin America, where some 56 million people exited poverty during a "golden decade" of growth, has been hit hard by the slowdown.

"Latin America is arriving (to the meetings) in a vulnerable, delicate situation," said Peruvian economist Jorge Gonzalez Izquierdo, the country's former labor minister.

"An economic slowdown, rising inflation and increasing currency devaluation, with the risk of people returning to poverty and a vulnerable middle class."

The IMF's new global growth forecast, which it will publish Tuesday, and a statement from the G20 finance ministers Friday will likely reflect the reigning pessimism on emerging markets.

In Latin America, the poster child for the downward trend is Brazil, the region's largest economy and the world's seventh, which has gone from emerging giant to basket case in five years.

The country entered recession in the second quarter and recently had its credit rating downgraded to junk status by Standard & Poor's.

Brazil has relied too heavily on iron ore, soybeans, oil and other commodities to drive its growth, failing to diversify or save for a rainy day, critics say.

Now that a slowing China's demand for commodities has fallen, the 7.5-percent growth Brazil's economy posted in 2010 has collapsed into a contraction that the government says could last through 2016, becoming the longest recession since 1931.

It is not alone in the region.

Latin America has long relied on its natural resources to drive growth, cycling from boom to bust as global prices fluctuate.

"Latin America's greatest problem is that when it has the means it doesn't do much with them. The countries in the region only act when they're in crisis," said economist Pedro Tuesta, a Latin America specialist at Washington-based consultancy 4CAST.

- Worst in six years -

Latin America's growth will come in at 0.5 percent this year, its lowest in six years, led by contractions of 1.5 percent in Brazil and 5.5 percent in Venezuela, predicts the Economic Commission for Latin America and the Caribbean, a United Nations panel.

"Smaller economies in the region like Peru, Colombia and Chile are more resilient, but not immune, because they are slowing and are also dependent on commodities," said Alberto Ramos, Latin America research chief at Goldman Sachs.

Chile, the world's top copper producer, is particularly exposed to the slowdown in China, the destination for 25 percent of its copper output.

With the region in slowdown and the United States poised to raise interest rates for the first time since 2006, Latin American currencies have taken a beating in recent months, making imports more expensive and fueling inflation.

The worst case is Venezuela, which has not published its official inflation statistics in months, but where experts say the annual figure is likely more than 100 percent, which would be the highest in the world.

Venezuela, which holds the world's largest proven oil reserves, has been devastated by crude prices that have plunged from around $120 a barrel in June last year to less than $50 now.

Other Latin American oil producers like Mexico, Colombia and Ecuador are also being pummeled.

The region "needs to launch a transition toward a new growth model that depends less on commodities and more on other sectors of the economy, such as productivity and investment," said Alejandro Werner, director of the IMF's Western Hemisphere department.

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today latin america an emblem of emerging markets sputter Arab Today, arab today latin america an emblem of emerging markets sputter

 



Arab Today, arab today

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today latin america an emblem of emerging markets sputter Arab Today, arab today latin america an emblem of emerging markets sputter

 



Arab Today, arab today Etiquette expert calls for short visits

GMT 16:21 2017 Monday ,26 June

Etiquette expert calls for short visits
Arab Today, arab today France defies terrorism through tourism

GMT 15:18 2017 Saturday ,20 May

France defies terrorism through tourism
Arab Today, arab today Mai Al-Jeddawi presents décor ideas for Ramadan
Arab Today, arab today
Arab Today, arab today

GMT 09:49 2017 Tuesday ,02 May

Girl barred from Malaysia chess competition

GMT 08:48 2017 Saturday ,06 May

Climate science: Bad news gets worse

GMT 16:25 2017 Sunday ,04 June

“Suhoor” is basic meal for fasting

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons

GMT 11:09 2017 Sunday ,25 June

HUAWEI P10 the ‘guru’ of portrait shots
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday