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Latin America

One could easily question the logic of forecasting as a single bloc the enormous diversity of Latin America. Its largest economy (Brazil - US$605 Bn) dwarfs its smaller club members (e.g. Nicaragua - US$700 million). However, most financial institutions, governments, and corporations continue to track the region’s performance as a whole - one of the reasons, perhaps, why its economies in the past tended to move in concert, especially when bad news loomed. That said, 1999 was a disastrous year for South American economies (-1.5% GDP) and quite positive for Mexico and Central America (+3.5%) thanks to the latter’s increasing ties to the US and a year without political risk. In 1999, Mexico proved that it could avoid regional contagion (from Brazil’s 60% devaluation and lesser falls in Colombia, Ecuador, Peru and Chile). Even Ecuador’s suspension of debt payments and President Chavez’s symbolic political victory sent barely a ripple through the region. It appears that creditors and investors are finally learning to differentiate economies in a region that enjoys almost no economic integration.