In light of the European crisis and slow growth in the U.S., the best protection for Latin American countries is macroeconomic discipline.
Although it is believed that regional banks are “solid, liquid and stable,” the recommendation for Latin America to avoid or at least mitigate the inevitable effects of the economic crisis in Europe and the slow recovery of the U.S., is to keep a lid on fiscal deficit.
An article in Prensa.com reports that the president of the Latin American Banking Federation (FELABAN), Oscar Rivera, has recommended that countries in the region comply with the rules governing the economy and containing the fiscal deficit. These are some recipes to avoid crisis being suffered by Europe. “The logical thing is for governments not to have budget deficits. Not having deficits and making any long term debts shortened as much as possible. ”
China, which is seen as the locomotive of the global economy, “in the second quarter posted its lowest growth rate in the last three years (7.6%)”, meaning that it may not be the solution to the crisis in Europe which is one of the major markets for Latin American exports.