SANTIAGO, Chile — Few people are as intensely worried about the slowing Chinese economy as Latin Americans. Not only does China buy nearly 40 percent of Chile’s copper, but its once-insatiable demand helped push copper prices from $1 to $4 a pound.
Meanwhile, Beijing plowed billions into Peruvian mines and fisheries and spent billions more buying soybeans from Argentina and Brazil. And it propped up the Venezuelan government to the tune of $50 billion in loans, to be paid in shipments of oil.
China’s voracious hunger for Latin America’s raw materials fueled the region’s most prosperous decade since the 1970s. It filled government coffers and helped halve the region’s poverty rate.
That era is over. For policy makers gathered here last week for the International Monetary Fund’s conference on challenges to Latin America’s prosperity, there seemed to be no more clear and present danger than China’s slowdown.
“The commodity boom allowed governments and companies to avoid hard choices,” Andrés Velasco, Chile’s finance minister from 2006 to 2010, told me. “For goodness’ sake even Argentina grew by 5 to 6 percent per year for almost a decade.”
Copper is back under $3. As commodity prices continue to swoon, driven in large part by China’s weaker demand, the going will get much tougher.
That’s especially true of the major oil exporters, clobbered by a collapse in oil prices driven by faltering global demand and increased supplies from the United States and elsewhere.
Venezuela, notably, is in free fall. The I.M.F. expects the Venezuelan economy to contract both this year and next. And it has been forced to limit its promised oil shipments to China, in effect defaulting on its Chinese debt.
But the commodity decline isn’t sparing many. “Growth in Latin America should move back to pre-commodity boom rates,” said Alejandro Werner, who leads the Western hemisphere division at the I.M.F. Indeed, the fund expects the region to grow barely 1.3 percent in 2014, a third of its pace just three years ago.
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