Argentina’s currency crisis has put the spotlight on the country’s growing economic fragilities, but vulnerabilities in the region’s other major economies have diminished in recent years. Current account deficits of most countries are now less than 2% of GDP, which is smaller than at any point over much of the past decade. And most shortfalls are more than covered by FDI, which tends to be a relatively stable source of funding. Foreign currency debt is high relative to other EMs in some economies (notably Chile and Peru), but this is mainly in the corporate sector and appears to be well hedged. Economic growth in the region remains relatively sluggish and Brazil’s fiscal position is a long-term concern. But Argentina aside, external vulnerabilities in the major economies in Latin America are much lower than in the past.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services