The economies of some nations in Latin America are experiencing an unprecedented economic surge compared to recent years. The demands in Asia for commodities coupled with the economic policies countries have implemented to combat deficits and inflation rates are responsible for the increase in investment and growth. The World Bank predicts that the economy in the region will have a 4.5 percent growth rate this year.
Brazil is leading the pack with a 9 percent growth rate in the first quarter and an estimated 7.3 growth at the end of this year. Mexico in spite of its sharp contraction last year has a reported 4.3 percent growth rate in the first quarter and could even reach 5 percent this year. For Peru, a small nation plagued by hyperinflation and two-decade war, the GDP reached 9.3 percent in April in comparison to the same month last year.
Venezuela on the other hand, and its neighbor Ecuador are not enjoying the benefits of this economic surge. Electricity shortages and fears of expropriations caused GDP to shrink 5.8 percent in the first quarter in Venezuela.
This economic surge is in large part due to increased business relations with Asia. Some scholars in the region speculate that the economic boom won’t last too long due to shaky political systems, the excessive reliance on commodity exports and the risks associated with increase trade with China. Latin America has become susceptible to Chinese policies that increased the demand for commodities.
Other economists attribute this phenomenon to temporary low international interest rates, another factor enabling the economic growth. Whichever the case may be, Latin American economies are rebounding rapidly after the world’s economic downturn, and recent natural disasters in the region. Chile rebounded from the February earthquake rapidly and had an economic growth of 8.2 percent in April from the previous month. Peru’s economic growth is expected to rival or outstrip Brazil’s over the next few years, but for now Brazil ‘“embodies the rise of emerging powers, one of the great themes of this century” according to David Rothkopf, a former Commerce Department official.