The Great Recession in South America, as it mainly consists of commodity exporters, was not directly affected by the financial turmoil, even if the bond markets of Brazil, Argentina, Colombia and Venezuela have been hit.[1]

On the other hand, the continent experienced a tough agricultural crisis at the beginning of 2008.[2] Food prices have increased a lot, due to a lack of arable land. One of the main reasons for the loss of agricultural land was the high value offered by the production of biofuels. However, second generation biofuel processes is slowly being implemented in order to extend the amount of biofuel that can be produced sustainably by using biomass consisting of the residual non-food parts of current crops, such as stems, leaves and husks.[3] Other crops that are not used for food purposes (non food crops), such as switchgrass, grass, jatropha, whole crop maize, and miscanthus could be used to produce biofuels without starving the population that are dependent on food products.[3] Industry waste products (i.e., woodchips, skins and pulp) from fruit pressing would also replace the need to waste arable land for biofuels; possibly improving the South American economy.[3] Food prices, rising since 2002, ascended from 2006, reaching a peak during the first quarter of 2008. In one year the average price of food rose by about 50%.

Then South American countries were affected by both the global slowdown and the decrease in food prices due to the declining demand.[4] In June 2008, the Economic Commission for Latin America and the Caribbean (ECLAC) declared it expected a 4% growth for 2009. However at the end of the year it predicted that the year 2009 would put an end to six years of prosperity during which Latin America has benefited from high raw material prices.[5] Production in the region is likely to decline and unemployment to increase.[6][7] However, the Center for Economic and Policy Research has estimated that the region may be able to cope with the global downturn with the right macro-economic policies, as these countries no longer depend on the U.S. economy.[8]

Countries

Brazil

While previously thought immune to the global financial crisis, the economy of Brazil shrank 3.5% in the fourth quarter of 2008, with industrial production in January 2009, 17.2% below that of January 2008. Growth for 2008 as a whole was 5.1%. Capital spending fell 9.8% in the fourth quarter while household consumption fell 2% from the third quarter.[9] Another report, in The Wall Street Journal, showed drop in gross domestic product of 13.6% in the 4th quarter of 2008 on an annualized rate and a drop in industrial production for December, 2008 to a rate 18.6% lower than December 2007, with a loss of over 700,000 jobs between November 2008 and February 2009.[10]

Argentina

As the second-largest economy in South America and an important exporter of both machinery and agricultural goods, Argentina has been affected by the global slowdown. The country has been seeing slower economic growth recently, seeing its growth rate forecast reduced from nearly 7% in 2008 to 0% in 2009,[11] and due to the steep drop in commodities prices, plus a long, damaging drought in the farm provinces, local economists believe the country may fall into recession.[12][13] However, former President Néstor Kirchner, the husband of the current president, Cristina Fernández de Kirchner and leader of the ruling Justicialist Party, said in a speech on February 17, 2009, that due to the international crisis, Argentina in 2009 will face "the most difficult year in the last century."[14]

Ecuador

Ecuador is seeking ways to default on sovereign debts incurred under the government of Gustavo Noboa, which the present government deems to have been incurred illegally.[15] If Ecuador defaults, it will be the first developing country to default on sovereign debt since the crisis began.[16]

Caribbean Islands

The International Monetary Fund (IMF) said as soon as February 2008 that a U.S. slowdown would hurt the economies of the Caribbean Islands, especially those in the Eastern Islands. Indeed, the tourism sector makes up a large part of the Islands' economies, so that they are heavily dependent on the number of U.S. visitors each year.[17] However, the lower inflation and currency depreciation in several Latin American and Caribbean nations can have offset this impact of the financial crisis, sustaining the activity.[18]

See also

References

  1. ↑ ""Subprime": lejos de A. Latina" (in Spanish). BBC Mundo. August 1, 2007. Archived from the original on 2009-01-13. Retrieved 2010-01-05.
  2. ↑ Poverty Declines Slightly in Latin America and the Caribbean, in Spite of Global Financial Crisis Archived 2011-07-20 at the Wayback Machine, ECLAC Notes Nº 59 (9 December 2008)
  3. 1 2 3 Oliver R. Inderwildi, David A. King (2009). "Quo Vadis Biofuels". Energy & Environmental Science. 2 (4): 343. doi:10.1039/b822951c.
  4. ↑ "Latin America risks reverting progress in poverty reduction / Global financial crisis will affect region's trade with the rest of the world" (PDF). ECLAC. December 2008. Archived (PDF) from the original on 2011-07-20. Retrieved 2010-10-02.
  5. ↑ "Preliminary overview of the economies of Latin America and the Caribbean 2008". ECLAC. December 2008. Archived from the original on 2011-07-20. Retrieved 2010-10-02.
  6. ↑ "Growth in Latin America and the Caribbean Is Projected to Be 1.9% in 2009". ECLAC. 18 December 2008. Archived from the original on 20 July 2011. Retrieved 2 October 2010.
  7. ↑ "Amérique latine : fin de six années de croissance soutenue" (in French). RFI. 2008-12-19. Archived from the original on 2009-02-01. Retrieved 2010-10-02.
  8. ↑ "South America: Recession Can Be Avoided". CEPR. November 16, 2008. Archived from the original on January 18, 2009. Retrieved October 2, 2010.
  9. ↑ "Brazil Shrinks 3.5%, Worst Decline in 13 Years" Archived 2009-11-28 at the Wayback Machine, Brazzil, 11 March 2009
  10. ↑ Regalado, Antonio. Brazil's Economic Outlook Becomes Focus in Political Battle. The Wall Street Journal. 2009-03-28. URL:https://www.wsj.com/articles/SB123792987606830301 Archived 2017-08-10 at the Wayback Machine. Accessed: 2009-03-28. (Archived by WebCite at https://web.archive.org/web/20090328063654/http://online.wsj.com/article/SB123792987606830301.htmlPlease note that the short ("opaque") form of the WebCite URL should be used only in addition to citing the original URL in your bibliographic reference. Alternatively, please use the "transparent" (but very long!) WebCite URL:
  11. ↑ "El FMI dijo que la economía argentina no crecerá en 2009". Tucuman, Argentina: La Gaceta. Feb 5, 2009. Archived from the original on 2011-06-10. Retrieved 2009-02-19.
  12. ↑ "Prevén que éste será el peor año económico desde 2002". Buenos Aires, Argentina: La Nacion. Feb 2, 2009. Archived from the original on 2009-02-20. Retrieved 2009-02-19.
  13. ↑ "Argentina Announces $32 Billion Stimulus Package". Buenos Aires, Argentina: Latin American Herald. Dec 29, 2008. Archived from the original on 2012-06-07. Retrieved 2009-01-19.
  14. ↑ "Para el ex presidente, el 2009 será "el año más difícil de los últimos cien" y pidió "memoria"". Buenos Aires, Argentina: El Cronista. Feb 19, 2009. Archived from the original on 2009-02-23. Retrieved 2009-02-19.
  15. ↑ Ecuador renews default threats
  16. ↑ "Stratfor.com homepage, December 5, 2008". Archived from the original on September 22, 2012. Retrieved October 2, 2010.
  17. ↑ "Caribbean islands may be hit by US recession". Property Wire. 13 February 2008. Archived from the original on 15 July 2011. Retrieved 2 October 2010.
  18. ↑ "Central America and the Caribbean Will Be the Most Affected Subregions By Standstill in Tourism". ECLAC. 23 December 2008. Archived from the original on 20 July 2011. Retrieved 2 October 2010.
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