The Financial Hurricane Hits Latin America

Recent events have disproved the notion that emerging nations had “decoupled” themselves from fluctuations in the advanced economies, and have shown that most emerging economies are still fragile and affected by what happens in the important financial centers. Indeed, the effects of the coming global recession will be particularly severe in Latin America.

LOS ANGELES – A few weeks ago, the world was on the edge of disaster. Fortunately, the decisive actions taken by the advanced countries’ monetary authorities – including provision of unprecedented amounts of liquidity – prevented a complete financial meltdown. The world has avoided the “Argentinization” of the international financial system.

What has not been avoided is a recession that will be deep, long, and global. In the coming months, nearly every region in the world will experience economic deceleration, with exports declining and unemployment increasing.

Recent events have disproved the notion that emerging nations had “decoupled” themselves from the advanced economies. The facts have shown the opposite to be true. Most emerging economies are still fragile and affected by what goes on in the advanced countries. The effects of this recession will be particularly severe in Latin America.

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