March 15, Abstract The debt crisis exploded into public view in August of when Mexico announced to the world that it was unable to pay what it owed to its international creditors. The rapid rise in large-scale loans to the Third World, especially to the largest and most rapidly growing countries such as Mexico, Brazil and Argentina, had occurred in the s under conditions of rapid inflation and increasingly floating interest rates.
Take the Brazilian Real: The Mexican Peso shows a similar trend: It is not only hurting trade, it also affects debt collection in Latin America, from individuals and businesses alike.
Here are five negative effects of currency devaluation on collections in Latin America. The first effect might be the most obvious: It means that individuals and business may not be able to anymore pay at the same pace and in the same quantities.
A popular economic tool for governments in Latin America is, in times of pressure on currency, and in an attempt to protect national economies and currencies, to introduce foreign currency controls, putting up hurdles for local individuals and businesses to buy foreign currencies like the US Dollar.
This makes it more complicated, and more costly, to pay foreign invoices and debt, causing a delays in payment of, and b increase of outstanding foreign debt.
Please check out some of our previous posts about Currency Exchange Controls. Some of the most notorious examples in Latin America of effects are seen in VenezuelaArgentina and Brazil.
As soon as individuals and businesses cannot pay debts and invoices become overdue, and individuals and businesses in Latin America start to increasingly default, there will be a pressure on the commercial relationship between individuals and businesses, and business relationships and international prestige will be negatively affected.
If Latin American individuals and businesses cannot pay debts anymore or it becomes harder to collect, credit insurance companies and foreign lenders might become more conservative as to respectively insuring and lending against business in Latin America, which negatively affects trade with Latin America and economic growth and business activities.
Ironically, these effects might increase international debt collection business in Latin America. However, on the other hand, it will become harder to actually successfully collect outstanding debts in Latin America become of less resources and more obstacles to pay.Caribbean and Latin America Daily News.
CARACAS, Venezuela (AP) — Venezuela's government announced Friday that it is devaluing the country's currency, a long-anticipated change expected to push up prices in the heavily import-reliant economy.
Latin America. The debt crisis of the s is the most traumatic economic event in Latin America’s economic history. During the “lost decade” that it generated, the region’s1 per capita GDP fell from % to 98% of the world average, and from 34 to 26% of that of developed countries (Bértola and Ocampo, , Table ).
Mexican peso sinks to new low as uncertainty hangs over Trump victory one of its biggest ever slumps since a devaluation. it could impede growth for the Latin American country. We discussed the challenges Latin America will be facing in the near future, resulting from strong capital inflows, a weakening dollar, and an undervalued yuan.
Since the international financial crisis started, there have been two significant changes in the international economy. Report: There Were 2, Femicides in Latin America in Share Conducted by the Gender Equality Observatory branch of CEPAL, the report polled 23 countries throughout the region.
Still, devaluation is taking a toll in dollar terms on luxury retailers who sell in local currencies in the region, said Christian Konrad, managing director for Latin America, Caribbean and travel retail for Bulgari.