When the developed world sneezes, the old saying goes, Latin America catches a cold. But now, after decades of austerity and reforms, the region's leaders say their immune systems are in pretty good shape.
Latin American politicians and business leaders gathered among the world's elite at a Swiss ski resort are speaking from a position of power, crowing about successes in places like Brazil, Mexico and Chile and even offering lessons to Europe about how to deal with crippling debt crises.
“Latin America has never been better equipped to move forward,” said Guillermo Ortiz, former governor of the Bank of Mexico. “We don't have to worry about inflation shooting up to 100 percent next year. This is invaluable, because it unleashes the possibilities at a micro level of doing everything that we need to do.”
“This,” he added, “is really the decade for Latin America.”
The rosy assessment constitutes a startling reversal of fortunes. Take Brazil, which had to take a $30 billion loan from the International Monetary Fund a decade ago. Brazil is booming now, making billions available to the IMF and has indicated it will contribute to a European bailout fund.
To be sure, Latin America still has economic problems, including pervasive corruption and a yawning gap between its rich and poor. But the region is growing at rates that Europe and the United States can only eye with envy.
Enrique Iglesias, the head of the Iberoamerican organization, said Latin America offers some valuable lessons for Europe, which is struggling to avoid chaotic defaults among its weaker countries because of unsustainable government debt.
He outlined the steps Latin America took to resolve its own crisis: restructuring debt, imposing new taxes, implementing fiscal reforms, solidifying its banking sector and drawing new investment in the region.
“It's a pity the Europeans didn't look — not to copy, but … it could be of some use to our European friends,” he said.
Ortiz recalled the so-called Brady plan in the 1980s, in which Latin American debt holders essentially took a haircut — banking talk for forgiving some debt — like that now being negotiated for Greece's enormous debt. He pointed out that the Latin debt relief went along with painful political and economic changes.
“The key point is that Latin America adapted,” he said. “It took really important reforms.”
Those reforms, leaders say, have paid off in a big way, especially as the world contemplates the possibility of another recession spurred by the European debt crisis.
“I think that Latin America can withstand a European problem,” Ortiz said. “We will have a recession but not a domestic financial crisis.”