Latin America: leaders united on crisis?
The official theme of the 18th Ibero-American Summit, held Oct. 29-31 in San Salvador, El Salvador, was "Youth and Development," but the global financial crisis was the main topic of discussions by the representatives of Spain, Portugal and 19 Latin American countries.
Despite strong differences among the 19 heads of state who attended—from supporters of neoliberalism like Salvadoran president Elias Antonio Saca and Mexican president Felipe Hinojosa Calderón to supporters of state intervention like Bolivian president Evo Morales and Ecuadoran president Rafael Correa—the participants agreed on a united message for Argentina, Brazil and Mexico to take to a meeting in Washington, DC of the Group of 20 (G20, the Group of Seven leading industrialized nations plus the largest "emerging economies"). They are to call for a sharp change in the advanced nations' policies of extreme deregulation, which Latin American leaders blamed for the crisis.
Latin American economies were initially somewhat resistant to the global meltdown, in part because of a recent policy of "unhitching" or "decoupling" their economies from the US. But the crisis began to hit Latin America seriously the week of Oct. 6 as the Brazilian real and the Mexican peso plunged violently. Argentina's economy is now suffering from a fall in the price of the grains that represent 45.2% of its exports, while Venezuela faces a sharp drop in the price of oil, which accounts for 90% of its exports. Brazil is also affected by lower prices for oil, while the real's drop has forced the Central Bank to intervene in the private banking system. Mexico, which is exceptionally dependent on the US economy, has had to use 10% of its foreign reserves to support the peso.
Last year Latin America's overall gross domestic product (GDP) grew by 5.6%; this year the increase is expected to be 4% or less. Since the beginning of the month the two largest economies, Brazil and Mexico, have been growing at a 3% and 1.5% annual rate respectively. (La Jornada, Mexico, Oct. 28 from Economist Intelligence Unit, 10/31/08 from correspondent; AlterPresse, Haiti, Oct. 31 from correspondent; Xinhuanet, China, Oct. 31)
From Weekly News Update on the Americas, Nov. 2
See our last post on the econocataclysm.