LatAm is in its best ever fundamental shape to withstand bearish pressure overhanging from wobbly developed world markets. But as IDB annual meetings get underway in Miami, the hostile external environment – how bad it will get and what impact it will have on EM – is top of the agenda. LatAm reserves are at all time highs, debt is rapidly being paid down, there is greater commitment to responsible fiscal and monetary policy and increasing evidence that countries can maintain stability through a whole cycle, rather than just the upswing. And locals remain fairly bullish. But those who assume the global turmoil will not dent LatAm are whistling past the graveyard. “People are concerned, you can feel the anxiety,” says a veteran LatAm debt banker. “Overall it’s going to be a hard year for everyone, there’s no doubt,” he adds. According to Larry Summers, Charles W. Eliot professor at the Harvard University Kennedy School, the US recession is different to the standard inventory recession, making it more likely to be protracted. “It’s appropriate I think to be quite concerned,” Summers tells LatinFinance, referring to the US economy. “We haven’t seen a comparable situation in a long time and I think there’s the possibility that it could get worse,” he adds.
