Reuters Summit-Latin America largely shielded from Greek woes

(For other news from the Reuters Latin American Investment
Summit, click on
http://www.reuters.com/summit/LatinAmericanInvestment10?pid=500) By Pedro Nicolaci da Costa

WASHINGTON, May 3 (BestGrowthStock) – Latin America is well
insulated from Greece’s debt crisis, though its exports might
suffer if the European currency continues to fall, Luis Moreno,
head of the Inter-American Development Bank, said on Monday.

The region’s currencies have risen as the euro retreats,
making Latin American exports less competitive, although rising
commodity prices have been beneficial for many countries.

“Clearly there are no Latin American banks holding major
pieces of Greek debt. Nor is there a lot of trade with Greece,”
Moreno told the Reuters Latin American Investment Summit.

“The larger question is the implications for Europe as a
whole and the euro in particular. That could have some
implications as to the value of the euro and what that means
vis a vi trade with Latin America.”

Asked whether money markets might seize up again as they
did in 2008, Moreno said it all depended on Europe’s ability to
prevent Greece’s problems from spreading.

“The big question is if this is contained to Greece,” he
said. “If this has wider implications I think it’s not only
going to affect Latin America, it is going to affect the world
economy.”

He dismissed the notion of a complete decoupling that might
make the region immune to global financial turmoil.

“When there’s a deep shock to the world economy there’s a
very quick recoupling,” he said.”

Moreno cited the risk that the need for rich countries to
issue large amounts of debt in coming years could have a
“crowding out” effects

Latin America, an unlikely oasis of stability through the
recent global financial crisis, is now more politically mature,
Moreno argued, making it more likely that fiscal discipline
will be upheld.

It also means that financial authorities in Latin America’s
big economies are attuned to the risks of overheating asset
prices. Moreno cited Brazil’s latest interest rate increase as
evidence that policymakers are willing and able to take
proactive steps to dampen volatility.

If anything, Latin America’s troubled past, which is dotted
with debt-linked crises, offers some lessons for Europe.

“The Greek issue reminds you of some things that were
poorly done in Latin America years ago,” Moreno said. “There’s
plenty of experience of how not to do it. And clearly in the
case of Greece I think the one conclusion one can make is that
the more delayed the reaction, the bigger the problem
becomes.”

The Inter-American Development Bank is a multilateral
lender that funds infrastructure and other projects throughout
the region.

Stock Market Today

(Additional reporting by Deborah Charles and Emily Kaiser;
Editing by Andrew Hay)

Reuters Summit-Latin America largely shielded from Greek woes