It’s not news that many economies of the developing world face barriers to financial inclusion, making it difficult for citizens to both borrow and save; but the good news is that help has arrived in the linking of mobile payments with remittances. From sub-Saharan Africa to Latin America and the Caribbean, mobile money is bringing the previously underbanked into the fold.
With economic growth returning to the developed world, the end of years of quantitative easing and easy monetary policy is in view; inflation concerns are reviving, guaranteeing rising interest rates along with tightening liquidity. Emerging markets in Latin America are benefiting from higher commodity prices, and despite some political tensions are proving to be an increasingly attractive destination for investor funds.
As economic conditions return to “normal” in the industrial world, policy interest rates will inevitably rise from zero to “normal”—but not necessarily in Latin America and the Caribbean. Central banks in LAC will need to tailor their monetary-policy decisions to tackle the three-pronged challenge of currency depreciation, higher inflation and deceleration in economic activity, as capital flies away from emerging markets.
Brazil’s economy is emerging from a difficult few years—but when analysing its prospects, a positive, long-term view is warranted, based on the country’s important position in world trade. With a little help from its friends and its own internal enterprise, this major South American economy, the world’s ninth largest by nominal GDP, has every reason to expect a triumphant comeback.
Chile has been one of South America’s mainstays, lauded as possibly the continent’s wealthiest and most stable country. But the Chilean economy, the health of which is heavily dependent on copper exports, has suffered greatly since the decline of the commodity super-cycle in 2014-15, and credit-rating agencies are showing no mercy—making life even more difficult for the country’s incumbent government.
In the midst of the political and economic turmoil that has plagued Brazil in recent times, there is one financial sector that appears to have particularly strong credentials for buoyant growth over the coming years.
Brazil started the decade off as Latin America’s emerging-market darling but has been trapped in a dark economic and political tunnel since early 2014; is the country finally beginning to see the light at the end? One indicator, the Bovespa stock-market index, replies with a resounding yes.
In a year marked by political change across the globe, the closing weeks of 2016 delivered yet another moment of significant upheaval. Following weeks of public protest, South Korea’s parliament voted to impeach President Park Geun-hye on December 9, while the first public hearing to kick off the trial was scheduled for January 3, 2017.
Chile, one of Latin America’s most resilient economies, has not been shielded from recent global headwinds, such as low commodity prices and slow growth of key trading partners. Even so, the country is well equipped to exploit the opportunities of economic diversification, banking partnership and international trade.
Brazil’s demise has been remarkable. Nearly every major macroeconomic indicator is at historically undesirable levels at present, from unemployment to inflation, and from GDP (gross domestic product) growth to public debt.