Economy

Latin America has weathered economic crisis well

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.

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