How U.S. Financial Crisis Impacts Latin America

No region is immune from the international financial crisis sparked by the subprime mortgage debacle in the United States. This includes Latin America, which had recently enjoyed good times thanks to growing foreign investment and rising commodity prices.

But with the worldwide credit crunch now poised to transmit its effects to the real economy, Latin America will likely see a significant decline in export revenues and foreign direct investment originating from the U.S. over the next couple of years.

The crunch also is likely to increase the costs of debt financing for the region. And it all comes against a background in which economic growth in Latin America was already beginning to slow. Experts analyze the impact the credit crunch will have on various Latin American countries for Universia Knowledge@Wharton.

Notes Anita Kon, professor at the Catholic Pontifical University in Sao Paulo, "Emerging economies will be very much affected by the U.S. crisis, just like the rest of the world, because the financial system is quite globalized and the crisis tends to spread through the system." ...