Development and Finance from issue 2009/2

Zsuzsa Dömény

The Crisis and South America

- Abstract -

JEL E-32, F-52

Growth of roughly 3 percent is forecast for the South-American economy in 2009, a rate predicted only for this region of the world, besides Asia. Nevertheless, this by no means indicates that the global crisis is not affecting South America; growth is slowing sharply. South America must also take into account that the withdrawal of funds by leading developed countries, particularly the United States, and by multinational corporations will intensify in the countries of the region. Crisis management costs and expenses are being transferred increasingly evidently to peripheral and semi-peripheral countries. Funds are being reorganised on a global scale, whose social effects resemble early capitalism; inequality, poverty, and unemployment are escalating. The joint impact of the recession and the withdrawal of funds destabilises the rather poorly integrated structures, exposing certain countries even more. There is also a threat that the programmes and measures which were successful in Latin American states in the past few years in combating poverty and developing a social safety net will now recede under the influence of the crisis. The left-wing governments of Latin America must reckon with the fact that mass social discontent bred by the crisis could turn voters against the governing powers in these countries.

Zsuzsa Dömény, PhD, Director of the Centre for Latin-American Studies of the Hungarian Academy of Sciences

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