Everyone seems to agree that the economies of Latin America are experiencing a nice little recovery. The IMF, for example, just raised its forecasts for the region and is now projecting 4.1% GDP growth for the region, with 4.2% growth for Mexico and 5.5% for Brazil. Oh boy, numbers.
But here’s something interesting.
In an analysis of the region’s sovereign debt prospects (PDF), Fitch Ratings divides the region’s economies into three “camps.” One camp includes countries like Venezuela, Argentina, and Ecuador, whose recovery will be slower than that of the rest of the world for reasons that should surprise no one (high inflation, weak institutions, poor fiscal discipline, if you must know).
In a second camp are countries like Chile, Peru, and Brazil, whose good fiscal discipline, low political risk, and safe investment environments mean their economies will be growing like weeds this year and next.
Then we have the middle camp, which is basically countries that cast their development lot with the United States: Mexico, Colombia, Costa Rica, El Salvador. And here’s the interesting part. Fitch projects this group will see only a moderately-paced recovery specifically because they’re tied to the US.
Meanwhile, Fitch says the Chile/Peru/Brazil group is doing particularly well partly because it does more business with China.
So I ask you: At what other point in recent history has easy access and close ties to the US economy been seen as a disadvantage?
(Original image courtesy H. Langos via Wikimedia Commons.)