Great Recession in South America
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The Great Recession in South America, as it mainly consists of commodity exporters, was not directly affected by the financial turmoil, even if the bond markets of Brazil, Argentina,
Colombia Colombia (, ; ), officially the Republic of Colombia, is a country in South America with insular regions in North America—near Nicaragua's Caribbean coast—as well as in the Pacific Ocean. The Colombian mainland is bordered by the Car ...
and Venezuela have been hit. On the other hand, the continent experienced a tough agricultural crisis at the beginning of 2008. Food prices have increased a lot, due to a lack of arable land. One of the main reasons for the loss of agricultural land was the high value offered by the production of
biofuel Biofuel is a fuel that is produced over a short time span from biomass, rather than by the very slow natural processes involved in the formation of fossil fuels, such as oil. According to the United States Energy Information Administration (E ...
s. However, second generation biofuel processes is slowly being implemented in order to extend the amount of biofuel that can be produced sustainably by using biomass consisting of the residual non-food parts of current crops, such as stems, leaves and
husk Husk (or hull) in botany is the outer shell or coating of a seed. In the United States, the term husk often refers to the leafy outer covering of an ear of maize (corn) as it grows on the plant. Literally, a husk or hull includes the protective ...
s. Other crops that are not used for food purposes (
non food crop A nonfood crop, also known as industrial crop, is a crop grown to produce goods for manufacturing, for example fibre for clothing, rather than food for consumption. Purpose Industrial crops is a designation given to an enterprise that attempts ...
s), such as switchgrass, grass, jatropha, whole crop maize, and
miscanthus ''Miscanthus'', or silvergrass, is a genus of African, Eurasian, and Pacific Island plants in the grass family, Poaceae. ; Species * ''Miscanthus changii'' Y.N.Lee – Korea * ''Miscanthus depauperatus'' Merr. – the Philippines * ''Miscanthus ...
could be used to produce biofuels without starving the population that are dependent on food products. Industry waste products (i.e.,
woodchips Woodchips are small- to medium-sized pieces of wood formed by cutting or chipping larger pieces of wood such as trees, branches, logging residues, stumps, roots, and wood waste. Woodchips may be used as a biomass solid fuel and are raw material ...
, skins and pulp) from fruit pressing would also replace the need to waste arable land for biofuels; possibly improving the South American economy. Food prices, rising since 2002, ascended from 2006, reaching a peak during the first quarter of 2008. In one year the average price of food rose by about 50%. Then South American countries were affected by both the global slowdown and the decrease in food prices due to the declining demand. In June 2008, the
Economic Commission for Latin America and the Caribbean The United Nations Economic Commission for Latin America and the Caribbean, known as ECLAC, UNECLAC or in Spanish and Portuguese CEPAL, is a United Nations regional commission to encourage economic cooperation. ECLAC includes 46 member States (2 ...
(ECLAC) declared it expected a 4% growth for 2009. However at the end of the year it predicted that the year 2009 would put an end to six years of prosperity during which Latin America has benefited from high
raw material A raw material, also known as a feedstock, unprocessed material, or primary commodity, is a basic material that is used to produce goods, finished goods, energy, or intermediate materials that are feedstock for future finished products. As feedst ...
prices. Production in the region is likely to decline and unemployment to increase. However, the
Center for Economic and Policy Research The Center for Economic and Policy Research (CEPR) is a progressive American think tank that specializes in economic policy. Based in Washington, D.C. CEPR was co-founded by economists Dean Baker and Mark Weisbrot in 1999. Considered a left-lea ...
has estimated that the region may be able to cope with the global downturn with the right macro-economic policies, as these countries no longer depend on the U.S. economy.


Countries


Brazil

While previously thought immune to the global financial crisis, the economy of Brazil shrank 3.5% in the fourth quarter of 2008, with industrial production in January 2009, 17.2% below that of January 2008. Growth for 2008 as a whole was 5.1%. Capital spending fell 9.8% in the fourth quarter while household consumption fell 2% from the third quarter. Another report, in '' The Wall Street Journal'', showed drop in gross domestic product of 13.6% in the 4th quarter of 2008 on an annualized rate and a drop in industrial production for December, 2008 to a rate 18.6% lower than December 2007, with a loss of over 700,000 jobs between November 2008 and February 2009.


Argentina

As the second-largest economy in South America and an important exporter of both machinery and agricultural goods, Argentina has been affected by the global slowdown. The country has been seeing slower economic growth recently, seeing its growth rate forecast reduced from nearly 7% in 2008 to 0% in 2009, and due to the steep drop in commodities prices, plus a long, damaging drought in the farm provinces, local economists believe the country may fall into recession. To combat the effects of the financial crisis, the government announced a $32 billion stimulus package that is intended to create some 380,000 jobs and favor small and medium-sized businesses, with investment in
infrastructure Infrastructure is the set of facilities and systems that serve a country, city, or other area, and encompasses the services and facilities necessary for its economy, households and firms to function. Infrastructure is composed of public and priv ...
, gas pipelines and electricity generators, as well as the completion by 2010 of a new nuclear power plant. However, former President Néstor Kirchner, the husband of the current president, Cristina Fernández de Kirchner and leader of the ruling
Justicialist Party The Justicialist Party ( es, Partido Justicialista, ; abbr. PJ) is a major political party in Argentina, and the largest branch within Peronism. Current president Alberto Fernández belongs to the Justicialist Party (and has, since 2021, served ...
, said in a speech on February 17, 2009, that due to the international crisis, Argentina in 2009 will face "the most difficult year in the last century."


Ecuador

Ecuador is seeking ways to
default Default may refer to: Law * Default (law), the failure to do something required by law ** Default (finance), failure to satisfy the terms of a loan obligation or failure to pay back a loan ** Default judgment, a binding judgment in favor of ei ...
on sovereign debts incurred under the government of Gustavo Noboa, which the present government deems to have been incurred illegally. If Ecuador defaults, it will be the first
developing country A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...
to default on sovereign debt since the crisis began.


Caribbean Islands

The International Monetary Fund (IMF) said as soon as February 2008 that a U.S. slowdown would hurt the economies of the
Caribbean Islands Almost all of the Caribbean islands are in the Caribbean Sea, with only a few in inland lakes. The largest island is Cuba. Other sizable islands include Hispaniola, Jamaica, Puerto Rico and Trinidad and Tobago. Some of the smaller islands are re ...
, especially those in the Eastern Islands. Indeed, the tourism sector makes up a large part of the Islands' economies, so that they are heavily dependent on the number of U.S. visitors each year. However, the lower inflation and
currency depreciation Currency depreciation is the loss of value of a country's currency with respect to one or more foreign reference currencies, typically in a floating exchange rate system in which no official currency value is maintained. Currency appreciation ...
in several Latin American and Caribbean nations can have offset this impact of the financial crisis, sustaining the activity.


Timeline of the Great Recession across all continents


See also

* *
Great Recession in the Americas North America was one of the focal points of the global, Great Recession. While Canada has managed to return its economy nearly to the levels it enjoyed prior to the recession, the United States and Mexico are still under the influence of the wor ...
* Great Recession in the United States *


References

{{South America topic Economic history of South America S01 Economic policy in South America 2000s in South America 2010s in South America Economic crises in Argentina Economic crises in Brazil Economy of South America Recessions 2000s economic history 2010s economic history