The Slowdown In Latin America Threatens The Rise Of The Middle Class

The Slowdown In Latin America Threatens The Rise Of The Middle Class  | latin-america-460x201 | World News
Argentina is the country with the most economic decline in Latin America. Image credit:

Most of Latin Americans who have entered the middle class in the last decade remain vulnerable.

According to the United Nations Program for Development (UNDP), although 56 million Latin Americans have moved out of poverty between 2000 and 2012, about 200 million, a third of the total population, could again be poor in case of a major economic crisis.

The UN, which provided the data in August, has now joined the financial world, which warns that the growing middle class in Latin America will be affected by the economic slowdown, according to a study released by Moody’s.

The report explains that the social ascension resulted mainly from increased purchasing power -more credit and higher wages- without it being accompanied by structural change.

The study of risk provided by the agency explains that the economic growth of the last 10 years was directly reflected in falling unemployment and increasing income.

Now it’s the opposite. What is happening for several reasons, is an economic slowdown in the region, which stagnates the growth of the middle class,” says Zurita Gersan, Moody’s senior vice president and co-author of the report.

The BBVA bank expects growth in the region will increase from 1.6% in 2014 to 2.5% in 2015. This improvement would be driven by the Pacific Alliance, whose members expect growth of  4 % in 2015. The Pacific Alliance is composed by Colombia, Peru, Mexico and Chile.

Among the reasons mentioned, Zurita highlights the slow recovery in the United States and Europe, but above all, the economic slowdown in China. The boom in its economy in the last decade favored exports of agricultural goods and minerals from Latin America, increasing economic dependence on Beijing.

But now, China is no longer buying as before. And with a lower global demand, prices fall. “

Nevertheless, Zurita argues that domestic policies that have affected the confidence of both consumers and investors, have had a greater influence on the low economic growth.

In the case of Brazil, which plans to grow only 0.9% this year, the study argues that the growth model based on consumption has been depleted due to high interest rates and private debt.

There is a disturbing mix of inflation and low growth. An inflation rate of 6% per year is normal for an emerging country, but not when growth is only 1%,” Zurita said. Still, the study maintains a positive outlook on the social achievements of the last decade.

The agency is more pessimistic on Argentina due to his “uncontrollable inflation, high interest rates and difficult situation of recession.” Furthermore, he believes that structural reforms undertaken by Mexico and Colombia have positive effects on economic growth in the long term.

Luis R. Miranda is the Founder and Editor of The Real Agenda. His 16 years of experience in Journalism include television, radio, print and Internet news. Luis obtained his Journalism degree from Universidad Latina de Costa Rica, where he graduated in Mass Media Communication in 1998. He also holds a Bachelor’s Degree in Broadcasting from Montclair State University in New Jersey. Among his most distinguished interviews are: Costa Rican President Jose Maria Figueres and James Hansen from NASA Space Goddard Institute. Read more about Luis.

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About The Author

Luis R. Miranda is an award-winning journalist and the founder and editor-in-chief at The Real Agenda. His career spans over 18 years and almost every form of news media. His articles include subjects such as environmentalism, Agenda 21, climate change, geopolitics, globalisation, health, vaccines, food safety, corporate control of governments, immigration and banking cartels, among others. Luis has worked as a news reporter, on-air personality for Live and Live-to-tape news programs. He has also worked as a script writer, producer and co-producer on broadcast news. Read more about Luis.

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