The Developing World in a Post-Bubble Economy

Aggressive and innovative monetary and financial sector policy actions in developed economies have pulled the global financial system back from the brink of an abyss. But impaired assets are not yet properly valued and neutralized. And new negative feedback loops may be forming between the financial and real sectors. In any case, even after banking circuits are eventually unclogged, confidence restored, and risk appetite revived, the financial euphoria of the recent past is unlikely to revive any time soon. The changed financial landscape has several implications for the developing economies.

Trade finance, banking introspection and emerging economies

Squeezes of trade finance have been among the factors responsible for the recent collapse of trade. Those squeezes should be seen in the context of an overall “introspection” of banking activities that has been sparked as an aftermath of the financial crisis. The prospects and strength of recovery in the global economy will depend on policy reactions to those issues.

Emerging Markets and the Systemic Sudden Stop

A year ago, I argued here about Latin America (October 14) “that, as long as there would be no meltdown of the global economy, the predominance of sustainable stock-flow interactions at both fiscal accounts and balance-of-payments in most countries of the region would preclude new ‘sudden stop’ episodes, differently from previous experiences”. Well, regardless of whether what has happened in the global economy in the aftermath of the bankruptcy of Lehman Brothers can be called a “meltdown” and qualify as my caveat, the fact is that no emerging market – in Latin America and the Caribbean (LAC) or elsewhere – has escaped from the truly “systemic sudden stop” that followed. Nevertheless, let me use the Brazilian case as an illustration of the key role played by idiosyncratic, country-specific conditions regarding fiscal and external sustainability.

Late Securitization and Micro-insurance

Last October 1, I argued here that the debris of securitization after the current financial crisis would still contain great utility, as at least some of the financial innovations of the last few years are likely to outlive the securitization excesses. I also referred to possible gains to be accrued in Latin America from a […]

Food and Oil Price Shocks and Latin America and the Caribbean

News about rising international food and oil prices are often treated as good omen for the region’s corresponding exporters. However, this is only a partial and benign take on the issue. First of all, there are the domestic inflationary shocks posed by those price hikes. Secondly, the net impact of higher food and oil prices […]

Oil Intensity and Energy Efficiency in Latin America

As it becomes doubtless that the current era of high oil prices has come to stay for long, increasing attention has been devoted to fiscal, productive and redistributive consequences of policies of detachment between domestic and international prices that have been recently followed in most Latin American countries. A good example is the piece on […]

Asymmetric Climate Change

In a previous job incarnation, I once spent (enjoyed) ten days in a mission throughout Russia. During an official dinner in Krasnoyarsk, Siberia, the speaker was describing the challenges faced by the management of local forests when he suddenly interrupted his talk and asked: “by the way, what is all this fuss about global warming?” […]

Three Tiers of Commodity Price Drivers

If one may paraphrase Mark Twain, recent news about the death of the commodity super-cycle and of a “commodity bust” were somewhat exaggerated. It is true that the steady general rise of commodity prices of latter years seems to have crossed an inflection point last March, along the week that followed the rescue of Bear […]

Global Agflation, Energy Security and Bio-fuels

Neither capital flights and “sudden stops”, nor even – at least so far – disastrous export collapses: if one is to single out a major recent macroeconomic phenomenon brought by globalization to Latin America, I suggest “agflation” – as The Economist has called the process of sustained rise in world agriculture prices since last year […]

China as a Bulwark and a Raging Bull

As I alluded to in previous entries (last August and October) on Latin American economies in the current context of global deceleration or recession, whatever happens to China’s growth will matter much for the region (and the world). Provided that the Chinese growth only slowdowns, its influence on prices and demand for commodities may provide […]