Andean economics: Beyond the boom

Sep 25, 2013

Andean governments are stepping up efforts co counter an economic slowdown in their once booming economies. Most expect the decline to be short-lived

By Lucien Chauvin

South America’s three most open economies have hit a rough patch. Booms in Chile, Colombia and Peru have started to lose their momentum, following a drop in worldwide commodity prices and expectations of tighter global liquidity.

Export earnings have fallen and local currencies have depreciated, in some cases severely: Peru’s currency, for one, plunged by more than 10% percent against the dollar in the first eight months of the year. Domestic demand has also softened unexpectedly across the region, particularly for durable goods. Car sales in Colombia were down 23% in the first quarter, although analysts expect an uptick in the second half.

While growth in the three economies is still enviable in global terms — Chile is projected to grow by 4.6%, Colombia by 4% and Peru by 5.5% — authorities are now scrambling to roll out measures to stimulate growth, cut bureaucracy and boost...

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