Strength Of LatAm Supported By More Trade With China, India

by Dave

The relative strength that Latin America has shown as it recovers from the global financial crisis underscores the increased importance of trade with China and India, as well as strong fiscal policies implemented in the region, said a panel of experts Tuesday.

While the U.S. and Europe have struggled to recover, Latin America is booming, with Brazil expected to grow over 7%, Peru forecast to expand 6.6% and Chile anticipated to increase at least 5% for the year.

In recent years, as most of Latin America has expanded trade with India and China, it has taken advantage of two of the strongest economic engines on the globe and it has broken with the old paradigm of south to north dependence, said Alfonso Prat-Gay, former president of Argentina’s central bank.

That translates into reduced dependence on trade with the U.S. and Europe and moves toward breaking the traditional dependence of the “South” on the “North.”

“It’s become less relevant for Latin America that the developed nations are in crisis,” said Prat-Gay.

In Chile, which has the most diversified portfolio for its exports in the region, 23.2% of its exports go to China, 13.2% go to developing Asia, which includes India, 16.4% stay within Latin America, 18% go to the European Union, and 11.3% go to the U.S.

Meanwhile, the region, once characterized by bouts of hyperinflation and bulging public debts, is also seeing sustained growth on the back of strong fiscal policies, which have by and large reigned in those problems, Chilean Finance Minister Felipe Larrain said.