The economic deceleration that followed the financial crisis has played around the world like a film in slow motion. The first to suffer was the US, the crisis epicentre. The movie then opened in Europe, with a strong showing in its more vulnerable southern countries. The slowdown moved on to China and is now opening in other emerging economies, not least South America’s. Although asset prices there have fallen, there is little sense of a financial crisis. Indeed, the political effects of the slowdown may prove more lasting than its economic ones. The “pink tide” may start to recede.
South America has enjoyed a banner decade largely thanks to a profound improvement in its terms of trade. The take-off in commodity prices that began in 2003 and worried so many elsewhere was a boon for the region’s oil, soya and copper-producing economies. Balances of payments moved into surplus, allowing for greater imports. Capital ... Read More