Political Risk Latin America Blog @PolRiskLatam

Latin America: reasons to be cheerful

Posted in News and Articles, Political Risk by politicalrisklatam on May 31, 2011

by Financial Times – Beyond Brics, May 31st, 2011.

There are plenty of reasons to be pessimistic about Latin America. As the FT argues in a leader on Tuesday: “Despite the commodity windfall, most major economies are running budget deficits and risk overheating…. The world’s most unequal continent suffers from conspicuous corruption, rising crime and a flourishing illegal drugs trade.”

Take a longer view, however, and the picture is more promising.

Latin America, once synonymous with default, is a global creditor. In 20 years, poverty has fallen from half the population to under a third. Domestic markets are expanding and every day more integrated across the continent; their dynamism is independent of the Asian-inspired commodity boom. The region also enjoys the demographic tailwind of a young working population, much as south-east Asia’s “tiger” economies did when they took off. Latin America faces a historic opportunity.

The FT has often argued elsewhere that Latin governments tend to risk squandering such opportunities. As Lex noted recently, Brazil, for example, spends too much time tinkering at the margin and not enough addressing root and branch reform. (continue reading… )

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