Page 82 - Ekonomija i Biznis_May 2016.indd

РWУOБRРLИDКА
Marjan Petreski
The economy of Latin
America:
Years without a crisis or
a crisis is yet to come?
From an economic point of
view, Latin America reminds
of high rates of extreme pov- an important component of the export
erty, large income inequality of many of the countries in the conti-
in the societies, unusually
high rates of inflation and depressed
currencies followed by currency crises.
However, Latin America experienced
the great world crisis from 2007 until
2011 much better than USA and the
Western European countries, which
faced with recessions followed by slow
healing. Actually, the period prior to
the commencement of the crisis and
during the crisis was marked by sig-
nificant economic growth, as well as
improvement of the social cohesion of
the continent. The average growth in
the period from 2004 to 2008 was 5.2%.
After the fast fall in 2009, the growth
once again increased to 4.1% in the pe-
riod from 2010 until 2013. Some coun-
tries, such as Uruguay, Panama and
Peru did not experience crisis at all:
they had continuous growth rates of
more than 6% during the entire period
from 2004 until 2013. Then the positive
movements were suddenly interrupted
in 2014, which, among other things,
was a reflection of international fac-
tors that are important for the Latin
82 May 2016
The author is
economic researcher
American countries, primarily, the fall
of prices of essential goods which are
nent.
However, the good performances
which the Latin American countries ex-
perienced in the middle and at the end
of the 2000s, actually started earlier.
Many of these countries had low and
consolidated budget deficits as early as
in the 90s, followed by solid and suffi-
ciently wide tax basis which provided
opulent financing of the budgets. The
good budget revenues were then direct-
ed towards financing of the social pro-
grams which certainly were intended
to withdraw the region from the high
poverty rates and particularly to im-
prove the condition of the people who
lived with less than 1.25 dollars a day.
In the 90s the inflation rate reduced
to a one-digit level, from the three and
four-digit levels in the 80s.
The period prior to the crisis was
marked by the significant reduction
of the external debt, in relative sense,
and the foreign exchange reserves in-
creased. Thanks to the surpluses of
the current account, the external debt
without the foreign exchange reserves