When China Sneezes, Latin America Gets the Flu Thanks to Commodities (IPS)

An IPS article notes how China’s massive urbanisation was built by metal supplied mostly by Latin American countries. But China’s slowing economic growth and falling commodity prices now threaten Latin American commodity booms. Kevin Gallagher, professor at Boston University and author of a recent China-Latin America bulletin published by Boston University’s Global Economic Government Initiative (GEGI), told IPS:

“As prices rose, exports grew and growth improved significantly. Latin America can thank China and the commodity boom for not being so affected by the [global] financial crisis [of 2008-2009]. However, exchange rates appreciated, investment concentrated in commodities, manufacturers couldn’t compete with imports from China and beyond, and commodity-led growth led to numerous social and environmental conflicts… Most LAC governments are not well prepared for a commodity price decline. Chile has a strong copper stabilisation fund and sovereign wealth fund that captured some of the commodity boom and stands ready to help out. Most other countries, such as Peru, were never able to admit that the price would change as they locked in a commodity-led growth path.”

Read the whole article, When China Sneezes, Latin America Gets the Flu, on IPS.

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