Until a few months ago, as financial and economic turmoil gripped the industrialised world, Latin America was suffused with optimism that it would escape the worst. “People ask me about the crisis and I answer, ‘go ask Bush’,” Brazil’s President Luiz Inácio Lula da Silva said of his US counterpart in early September. “It is his crisis, not mine.”
It is Mr Lula da Silva’s now. Brazil’s industrial production sank 6.2 per cent in the year to November, according to figures announced this week – the sharpest decline in output since December 2001.
Across the continent, the crisis has brought about a large-scale destruction of wealth. Claudio Loser, a former western hemisphere chief at the International Monetary Fund, calculates that 40 per cent of Latin America’s financial wealth was wiped out in the first 11 months of 2008 through falls in stock and other asset markets and currency depreciation. That $2,200bn (£1,440bn, €1,610bn) loss alone could cut domestic spending by 5 per cent next year, he estimates.
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