RIO DE JANEIRO – Latin America’s resilience in the aftermath of the 2008 financial crisis has been remarkable, especially when compared to the region’s performance in the 1980’s and 1990’s. But, as the world economy faces renewed uncertainty, the region must find new strategies to reduce the potential impact of volatile financial markets and protracted stagnation in the world’s richest economies.
Although Latin America’s growth corresponds to global trends, there is a good chance that, in 2012, the region’s economies will outperform industrial countries once again. Contraction of world trade and reduced financial flows will likely slow growth somewhat, but the annual pace should remain close to the region’s 2000-2008 average of 4%.
One reason for this prediction is that abundant liquidity in international markets and continuing high demand from China and India may prevent commodity prices – especially for agricultural products – from falling as much as they did during the 2008-2009 crisis. Gains in terms of trade have been crucial for growth in Latin America, given the region’s low domestic saving rates, because they encourage investment but have relatively little negative impact on current-account balances.
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