By Economic & Finance Report
It has been perceived that China’s economic slow growth recently may be affecting the Latin America’s economy, because of the lack of China’s purchasing raw materials in Latin America. Raw materials such as soybeans (Argentina), copper (Chile), coffee (Brazil) have seen recent drastic declines, especially since China’s has reduced its ability to purchase these lucrative commodities.
Countries such as Venezuela have been hit hard by the recent slowdown especially with the declining of oil and other precious resources. The IMF has predicted a country such as Venezuela will be contracting for the next two years, this year and next year.
It is stated that Latin America has focused to heavily on raw material output and not enough on diversifying other sectors in regional production. Many analysts speculated that China’s cheap labor eventually would outcompete Latin America’s labor force, which it did and the manufacturing sector in Latin America’s economy has suffered horribly for it.
A growing and stable China helped cultivate and economize many Latin American countries, and it is without this growth that stagnated the continent as well.Though it is implied by economists that Latin America may now need to focus more on regional development export and imports in the regional instead on dependency that has been plagued for decades by China, since the 1970s.
China has rebutted that the economic slowdown will be a long term effect to Latin America. They insist that the commodities that are exported to China serve as a mutual benefit for both Latin America and China, even more so then exports to the United States. As time passes and trade is one of the main focal points between China and Latin America, it remains to be seen how this economic barrier or stagnation develops itself, if or when it does…
-SB