Latin America in the international financial crisis
(SP/Di No. 12-99).
June 1999.

Permanent Secretariat of SELA.

The international crisis that was unleashed in mid-1997 has a certain originality when compared with other previous crises: although it came from developing countries it did not originate in Latin America. In spite of certain persistent weaknesses, (public deficits, growth imbalances), the adjustments that have been implemented following the debt crisis that occurred at the beginning of the 80s, and then after the Mexican shock , as well as the strong international liquidity context, pointed to quite a favorable future for the area in the second half of the 90s. Nonetheless, by contagion, first on the financial and then on the commercial planes, the crisis rapidly reached Latin America until it transformed that area into an important source of uncertainty. As a result of the Brazilian crisis, we are witnessing at present the development of recessive effects on the level of the actual economy, while external financing continues to be scarce and costly. Besides confirming the recurrent external vulnerability of the region, the current crisis has opened new discussions regarding institutional and political forms capable of dealing with the volatility of monetary and financial variables that are the results of the globalization process.

This Permanent Secretariat acknowledges the important contribution made by the authors, Egidio Luis Miotti, Carlos Quenan y Nathalie Ricoeur-Nicolaļ, who prepared this document in response to our request.