The Council on Hemispheric Affairs (COHA) has put out a nice summary of the various responses by Latin American governments to the global economic meltdown.
As the G-20 meeting is about to begin in London, the outlook for Latin American growth in 2009 is grim, as the tempo of foreign direct investment (FDI) and loans stand-by credits and development funds plummet, the demand for commodities diminish, and foreign remittances plunge.The World Bank vice president for Latin America and the Caribbean, Pamela Cox, is forecasting 0.3 percent growth for Latin America this year, down from the originally 2.7 percent predicted in January. Cox anticipates that countries most closely linked with the U.S. economy will be hit the hardest. Thus, NAFTA, CAFTA and the U.S.-Caribbean Basin Trade Partnership Act (CBTPA) may prove particularly harmful for Mexico, Central America, and the Caribbean in the foreseeable future.
On the other hand, South American nations like Peru and Brazil that have diversified their bilateral trade partners over the last decade, may be less impacted by the global recession. MERCOSUR, UNASUR, ALBA and other South American regional trade agreements could also help to soften the blow on the continent. Nonetheless, much of South America is now experiencing a recession, and the debate on how to most effectively respond to it varies widely among economists.
Click here for COHA’s country-by-country analysis.