Brazil Still Immune to US Mortgage Crisis, But Not the Rest of LatAm

    Foreclosure sign

    Foreclosure sign According to the joint indicator from Brazil's Getúlio Vargas Foundation (FGV) and the University of Munich Economics Research Institute (IFO) the Latinamerica economic climate dropped to its lowest level since July 2005 because of the United States mortgage and banking crisis.

    The economic climate indicator, ICE, which the two academic institutes jointly calculate since January 1998, show a drop to 5.2 points in last January, the same level as in July 2005 according to the FGV release on Thursday in Rio do Janeiro.

    It's the lowest ICE in two and a half years and reflects a fall in confidence in the region's economy compared to the 5.6 points of last October and 5.9 points of July 2007, the highest in three years.

    The fall back, according to the Latinamerican economic polling was caused mainly by the deterioration of the Expectations Index, which measures future expectations in the region and which dropped from 4.7 points in October 2007 to 4.1 points last January.

    The current situation index, which refers to the current situation of the economy, remained almost stable since it only slipped from 6.4 to 6.1 points in January.

    According to the FGV release the Latinamerican economy future expectations worsening tendency was already noticeable last October when the mortgage crisis smacked across all of United States and was even admitted by the Bush administration.

    The situation unleashed by the real estate and home credit market in the US has triggered intense debate about the possible effects on the world economy and "those results suggest two possible effects for Latinamerica: the current situation is relatively immune to the effects of the crisis but future expectations are worsening."

    "Consequently the hypothesis of a contagion of the crisis can't be discarded, although the current one is expected to have a relatively minor effect compared to the other crisis," adds the document.

    The ICE for Latinamerica dropped to 3.7 in January 1998 and to 4.5 in January 2002, when the region was under the full impact of other international crisis.

    The ICE by countries only improved in two of the twelve countries surveyed: Argentina where it increased from 4.3 in October 2007 to 5 in January 2008 and in Paraguay from 5 to 6.4 points in the same period.

    ICE remained practically unchanged for Brazil (6.5 down to 6.4); Costa Rica (stable at 7 points) and Peru (from 7.3 to 7.4).

    ICE continued to deteriorate in Ecuador (from 4.2 to 3.2 between Oct and Jan); Mexico (5 to 4.5); Venezuela (5.3 to 4.1) and Chile (6.6 to 5.3 points).

    Although the situation also deteriorated, ICE slipped much less in Uruguay, from 8.4 to 7.7 points and in Colombia from 6.2 to 5.5 points.

    By countries Uruguay leads with 7.7, followed by Peru, 7.4 and Costa Rica, 7. Brazil on the other hand climbed from position five to four (6.4) while Chile slid to fifth (5.3).

    The most striking case was Paraguay ranked eleven which shot to seventh position. Ecuador (3.2) and Venezuela (4.1) remained at the end of the ranking.

    Mercopress

    Tags:

    • Show Comments (2)

    • Eduardo C.

      For this reason, we are less vulnerable that other countries of latin america. But not immune!

    • Eduardo C.

      Compared with Mexico, that has the second greater economy of Latin America, Brazil has a much more, diversified economy. Nafta?! AIAIAI

    Your email address will not be published. Required fields are marked *

    comment *

    • name *

    • email *

    • website *

    This site uses Akismet to reduce spam. Learn how your comment data is processed.

    Ads

    You May Also Like

    The Brazilian Amazon may become a huge dry savannah

    Global Warming Won’t Spare Brazil’s Amazon, Which Will Turn into Dry Savannah

    An environmental group said Thursday, April 5, some of the world's greatest natural treasures ...

    Brazilian Petrobras offshore oil platform

    Brazil Confirms Large Oil Reserves

    State-controlled Brazilian oil and gas multinational Petrobras found large oil and gas reserves in ...

    A fishery in Brazil

    Despite Brazil’s Huge Coast Brazilians Eat Very Little Fish

    Fishery products as a source of income and food is the theme of the ...

    Economist Accuses Brazil and UN of Shameful Service for the US in Haiti

    The opening ceremony of the 6th World Social Forum in Caracas, Venezuela, Tuesday, January ...

    Brazilian currency, the real

    With 200% Credit Card Interest Rates Brazil Bracing for 12.5% Prime Rate

    The Brazilian Central Bank’s Monetary Policy Committee (Copom), which sets the country’s basic interest ...

    Making a Difference

    Sponsoring a youngster from a third-world country like Brazil promises to be an ongoing ...

    Brazil Sees Paraguay’s Coziness with US as Reason for Concern

    The creation of the Mercosur Parliament (Parlasur), scheduled to begin operations in January, was ...

    This Brazilian’s Passion for Flowers Bloomed into a Prosperous Business

    Flower grower Eulália Farrath manages a flower and ornamental plant production farm in the ...

    Brazil’s Oscar Hopeful: “Cinema, Aspirins and Vultures”

    The Brazilian pick that will run for one slot among the five Oscar nominees ...

    zzz

    Gol Brazilian Airline Goes Green in Treating Its Waste

    Brazilian airline Gol has developed its own program for managing aircraft maintenance waste at ...