Latin American countries are now struggling to control inflation and have succumbed to raising interest rates despite having slow growth economies. Inflation in this part of the world has a bad track record with Argentina, Bolivia and more recently Venezuela experiencing hyperinflation. Furthermore, these countries have been hit hard by the pandemic and their economy’s need to develop more economic growth to create jobs and higher incomes. Rising interest rates is the last thing they require especially after government stimulus programmes are winding down and the revenue from commodity prices is starting slow.
Latin America is struggling with the combined health and economic impact of COVID-19 than any other region. Inflation rates are currently – Brazil – 9.7% Venezuela – 5,500% Mexico – 6.1% Chile – 4.8% Peru – 4.95% Columbia – 4.4%
Source: FT – The spectre of high inflation returns to haunt Latin America. 11th September 2021