The year 2001 has seen steady declines in Latin America's economic outlook. This has been nowhere more evident than in Brazil, where forecasts have tumbled over the first half of the year. Projected real growth fell from an optimistic 4.5 percent at the beginning of the year to a much more skeptical 2.6 percent by mid-year.

Several internal and external factors have conspired to work against Brazil. The shrinking Real, which dropped by 20 percent in the first half of 2001, reflects the economy's vulnerability to external pressures. Argentina and the US, Brazil's two largest export markets, have both slumped. Combined with Japan, also in decline, these three markets account for nearly one-third of Brazil's exports.

The old cliché "united we stand, divided we fall" finds few better examples than today's political-economic crisis in Argentina. From the time his presidential honeymoon period ended, de la Rua has been undermined by members of his own coalition. To make matters worse, he was double crossed by Peronist provincial governors who reneged on promised budget cuts. Argentine voters, with an historical appetite for bold leaders, now think little of de la Rua. Fewer than 25 percent still support him.

Multinationals looking for growth in 2001 will find some encouraging prospects in Latin America. Signs of diminishing consumer confidence and spending are setting off alarm bells throughout the US economy. In response, corporate offices are scrambling to find markets to pick up the slack left by flat growth north of the Rio Grande. For the first time since 1997, Latin America will outgrow the United States.

Incan Mythology speaks of the Lady of the Moon, a person of royal blood who had been transported into the Heavens and given a bottle filled with water that she was to pour upon the earth when it was needed to ward off drought. She had a brother who, when angry, created thunder and lightning. During one such tantrum he broke the jar of water and there was a flood. This mythological metaphor comes to mind when forecasting the country's economy. Peru is blessed with mineral resources, but cursed by el Niño every 8 years, and has been led by some of the world's most colorful political characters. 2001 capped the end of a "thunderous" two-year period in Peruvian politics and four years of economic "drought". Peruvians have waited fifty months for some sign of recuperation. 2002 will bring the growth that the economy so desperately needs, marking Peru one of the more promising markets in the region next year.