The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

LATIN AMERICA: The world's forgotten crisis

Elections have a nasty habit of destabilizing Latin America's fragile financial markets. The latest election-inspired jolt came in July when Eduardo Duhalde, Peronist party candidate for Argentina's presidency, suggested that the country might not need to pay back all its debts. The impact was felt throughout Latin America. Spreads on bonds widened, stock markets fell and currencies weakened. While some Latin issuers have taken advantage of brief windows of opportunity to sell bonds and equities this year, many are struggling to raise finance, while much of the region heads into economic downturn. Michael Peterson reports

Brazil: The banks party through the crisis

Duhalde was quick to make it clear that he did not intend Argentina to default on its debt obligations. But Brazil's devaluation in January is still fresh in the minds of investors and after two years of wondering where the next emerging-markets shock will come from, the markets remain jittery. Unfortunately, elections loom in three of Latin America's biggest economies, Argentina, Peru and Chile. Traditionally, in Latin America, elections mean three things: politicians make populist statements, governments loosen the purse strings and capital flees.

In many ways Latin America - or at least South America - is suffering an economic crisis as bad as that in Asia. Although the region has endured repeated financial shocks in recent years, this is the first time for 15 years that the continent as a whole has suffered recession. Brazil's devaluation has brought Ecuador and Colombia to the brink of economic collapse, has put untold strain on Argentina's economy and has even pushed Chile's previously robust economy into sharp recession.

In contrast to Asia's economic crisis, which forced itself onto the world's attention in 1997 in a sudden clattering of falling dominoes - and unlike Russia's, which exploded into life with the announcement of a domestic debt default in August 1998 - Latin America's is a slow-drip crisis.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree