ACAPULCO, Mexico (Reuters) -- Latin America has weathered the worst
of a financial crisis sparked by devaluations around the world and is set to
grow again in 2000, the head of the Inter-American Development Bank said
Enrique Iglesias, president of the IADB, told Mexican bankers that Latam
America had taken the right steps to avoid the worst of the fallout from
financial storms in Asia, Russia and in Brazil.
"I think the worst is over, in particular I am optimistic about Brazil,"
told the annual convention of the Mexican Bankers Association in the Pacific
resort of Acapulco.
"The region has shown responsibility in the face of financial volatility
is the starting point for what will surely be a recovery in the year 2000," he
Asian financial turbulence in 1997 and 1998 led to a devaluation in Russia,
which in turn forced Latin American giant Brazil to allow its currency to float
in January, triggering economic recessions in many other Latin American
Brazil's currency, the real, fell around 40 percent before strengthening
somewhat against the dollar. It has stabilised in recent days on optimism a
$41.5 billion rescue package led by the International Monetary Fund will
combine with attempts to slash Brasilia's huge budget deficit to woo back
frightened foreign investors.
Nevertheless Mexico is the only Latin American country that is expected
see its economy grow this year. Brazil may see its economic output contract
around 5 percent, pulling Argentina in particular down with it.
Iglesias said the region will remain vulnerable to global volatility, especially
the extent it remains dependent on foreign capital to develop.
That capital can turn tail at the slightest sign of danger. On Friday,
Inc. co-chief executive John Reed told the Mexican bankers convention he
believed there was an excess of some $500 billion in U.S. markets which
represented capital that had fled Asia, Russia and Latin America.
But Iglesias said he believed Latin American nations were doing their
homework, cutting budget deficits, letting their currencies float and being
disciplined in their monetary policies in order to confront the effects of
"I think ... this volatility which we will have to live with has been to
extent managed and is being managed and I think the good and bad lessons
of past years should somehow leave us feeling a little satisfied that we are
handling things in the right way," he said.
Copyright 1999 Reuters.