Here We Go Again

This time it was supposed to be different. Even as the world economy spiraled into a free fall, Latin America seemed not only poised to break the boom-bust cycle of the previous three decades—but to survive the debacle of 2008. With the economic expansion that started in 2003, the region looked stronger than it had ever been, thanks largely to the structural reforms enacted as a result of previous crises. Most national economies were more efficient and resilient. Fiscal accounts had been put on a solid track. Debt ratios had started to decline, and debt composition moved away from short duration and dollar denomination toward safer forms, such as long-term domestic currency debt. Credit ratings improved, and a growing number of countries achieved investment–grade status, becoming at the same time less dependent on volatile capital inflows.