In your opinion, is Latin America reacting to the global economic crisis in a timely and effective manner? Why, or why not? Post your comment below and check back to respond so that we can create a dialogue!
Next week, we're going to look at the crisis from a regional perspective. Please take a look at this excellent article focusing on Latin America published in the Los Angeles Times. (Read article here) Select a reading circle role and be prepared to discuss the article on Tuesday.
Note: You are encouraged to find at least one additional resource to support your point of view. This will help us develop next week's language strategy: presenting facts.
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3 comments:
Silvia said,
Latin America, as an emerging market, depends on USA, not as much it was years ago, but it is still our main commercial partner.
We have already seen some consequences of the global crisis here in Costa Rica, as construction has stopped, especially in Guanacaste.
In the short term I can count at least three important effects: one is construction desaceleration, this implies unemployment and lowe investment. For example, one of my clients told me that they fired 2000 employees in construction sector in the last 3 months. It is just a matter of time to see the unemployment rate going up in other sectors, especially those related with it.
The second one is over exporters, once USA and Europe are desacelerating their demand we will meet problems internally, especially talking of our current account and our currency.
And the third one is liquidity in banks, we have seen that all banks are facing liquidity problems, they are showing posibut they know how dependable we are from international banks, and now we are meeting an increase in demand for money. To compite for funds banks are raising rates, when interest rate are going down worldwide to stimulate credit and economies.
Definitely there is a phrase: When USA gets a cold emerging markets get pneumonia.
I agree with Silvia°s comment.
Costa Rica exports extremely depends on US market, so less consumption there will obviously led to a decrease in CR exports, tourism revenues and foreign direct investment, which will increse the pressure to depreciate our currency, impact our GDP growth and CR unemployment rate.
Major EM countries has depreciated their currencies due to the financial turmoil, but CR not yet, so we have to keep an eye on our foreign exchange market and Central Bank decisions.
During last months we had seen how emerging market have been affected by this financial crisis. Investors pulled out of EM as worldwide economy cuts demand for the commodities. It means EM prices going down (yield up), and many investors going to..... the Church. CR is not the exemption, last week bond prices tumbled but now seem to stabilize. (at least not fall). Pray the Lord!!! That's All Folks. THE END... Hey It was my first time. It seems to be funny.
Carlos M.
I agree with Silvia, it will be very difficult for Latin America to face the crisis. Even though most countries have made en effort to diversify their exports, not only in terms of products, but also in terms markets, the fact is that more than the 90% of the regional GDP comes from raw materials.
I read that the main spread channel of the crisis in Latin America will be the price of the raw materials. An expert from the IMF said that a 10% fall in the prices can reduce Latin America's growth in nearly 1%.
As the article mentions, the crisis is now a reality for Latin America, the countries are suffering the effects of dependency of the big economies, some are better prepared to face this difficult times but most of them will need to check their way of doing business.
Andrea
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