Latin America, Overview of Economy, Business and Challenges
Latin America
An Overview of Economy, Business and Challenges
Introduction
Latin America suffered during the years of 1980-1990 with political instability and low growth rates. Nowadays the situation is different, the region is improving towards economic stability and grater democracy, however the reforms performed during the last decade are still incomplete. High rates of poverty and bad income distribution remain as the main problems of the region. The last few years has shown that Latin America economy is getting stronger and growing at unprecedented rates in the recent decades, making the environment for business much more attractive.
Economic Overview and Challenges
From the middle 1980s to the beginning of the 1990s Latin America was suffering from hyperinflation, which damaged the economic activities. World Bank and International Monetary Fund recommended the fixed exchange rate as an anchor to inflation and as a mean of obtaining economical stability. This policy showed itself very harmful and inefficient socially and economically, and in the end of the nighties Argentina and Brazil experienced major financial crisis. The economic policy strategy was changed to inflation targeting and some years latter the situation improved.
The favorable international context, and the boom of the commodity prices, has given a boost to the Latin American economy. However, the region could not take full advantage of this scenario without the macroeconomic fundamentals stabilized. The region is enjoying sustained current account surplus for the first time in decades and reduction of fiscal debt and increase in international reserves, this more stable macroeconomic environment and the less vulnerability to external shocks has lead to a negative trend on the risk analysis of the region. However, fiscal reform and consolidation remains as one of the biggest issues and challenges for the next few years. A reduction in public debt is important, because it
An Overview of Economy, Business and Challenges
Introduction
Latin America suffered during the years of 1980-1990 with political instability and low growth rates. Nowadays the situation is different, the region is improving towards economic stability and grater democracy, however the reforms performed during the last decade are still incomplete. High rates of poverty and bad income distribution remain as the main problems of the region. The last few years has shown that Latin America economy is getting stronger and growing at unprecedented rates in the recent decades, making the environment for business much more attractive.
Economic Overview and Challenges
From the middle 1980s to the beginning of the 1990s Latin America was suffering from hyperinflation, which damaged the economic activities. World Bank and International Monetary Fund recommended the fixed exchange rate as an anchor to inflation and as a mean of obtaining economical stability. This policy showed itself very harmful and inefficient socially and economically, and in the end of the nighties Argentina and Brazil experienced major financial crisis. The economic policy strategy was changed to inflation targeting and some years latter the situation improved.
The favorable international context, and the boom of the commodity prices, has given a boost to the Latin American economy. However, the region could not take full advantage of this scenario without the macroeconomic fundamentals stabilized. The region is enjoying sustained current account surplus for the first time in decades and reduction of fiscal debt and increase in international reserves, this more stable macroeconomic environment and the less vulnerability to external shocks has lead to a negative trend on the risk analysis of the region. However, fiscal reform and consolidation remains as one of the biggest issues and challenges for the next few years. A reduction in public debt is important, because it
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