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Verónica Rubio Vega | Post-crisis Responses and Prospects in Latin America
recent crisis has showed however two main distinctive characteristics
compared to previous episodes of financial distress in the region.
First, the shock originated in the financial sector of advanced
economies rather than in Latin America or another emerging market region.
Second, the relevant reduction of Latin American public external debt gave
governments more room to perform a stabilising role for private markets,
where external debt had remained high. 14 Meanwhile, the 2003-7 period was
marked by an economic boom based on the combination of various factors:
high commodity prices (also driven by fast growth in China), booming
international trade, exceptional financing conditions and high levels of
remittances. 15 Over the course of this boom, the rate of economic growth in
the region increased from an average rate of 0.6 per cent in 1996 and 1 per
cent in 2002 to a regional average of 6.2 per cent in 2004, 5.5 per cent in
2005, and 5.6 per cent in 2006. 16
Factors that facilitated previous economic booms are now operating
in the opposite direction. By the last quarter of 2008 the primary
commodities boom had already caught up in the vortex of the current
17
crisis. Yet, the response of many governments by then was still of ‘selfdelusion’:
the belief that their country could ride out the crisis on the basis of
relatively high reserves of foreign currency and relatively healthy (reduced)
14 Jara, Alejandro Ramon Moreno and Camilo Tovar. “The Global Crisis and Latin America:
Financial Impact and Policy Responses.” BIS.org Bank of International Settlements Quarterly
Review, June 2009. Web. 1 Dec. 2010. p.53.
15 Ocampo 704.
16 Veltmeyer 221.
17 Ocampo 722.
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