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IDB official discusses Latin American economy

Scott Englert | Friday, September 18, 2009

“The worst seems to be over,” said Eduardo Lora, chief economist and head of research at the Inter-American Development Bank (IDB) in Washington, D.C., of the recent financial crisis in Latin America.

Lora, a native of Colombia, spoke Thursday night at the Hesburgh Center of International Studies on the impact of the financial crisis in Latin America.

“We are back to levels of risk similar to those before the crisis,” Lora said. “Prospects are clearly improving for Latin America … it could have been worse.”

Lora noted the important role the United States’ economy plays in the economy of Latin America, citing the trade relations of the two regions. He indicated signs of financial improvement in a graph portraying the United States’ economy since the economic collapse last year.

“That’s a sign things are improving,” he said.

In addition to the United States, there are other important economic influences on Latin America.

“The world demand for manufacturing goods, commodity prices, cost of financial resources, amount of financial resources and remittances” were identified by Lora as the five primary “channels of influence on Latin America.”

Consequently, the future of Latin America will rest, at least in part, not only on the financial stability of the United States, but also on the stability of the entire world market.

“The game is not over,” Lora said. “We don’t know how fast the U.S. and world economies are going to grow.”

Though economies are beginning to show signs of revival, the United States and world economies are still relatively unstable. Latin America is plagued by a number of other factors, among which include the recent H1N1 virus outbreak (commonly known as swine flu). The disease, which has heavily impacted tourism, has taken a particularly harsh toll on Mexico.

“This was a terrible, terrible year for Mexico,” Lora said.

If anything, the situation in Mexico shows that despite the upward swing, the crisis is by no means over.

“[Latin America is] not out of the woods yet,” Lora said. “In spite of the recovery, big risks are still present.”