`Latin America could suffer the problems of US, Europe’October 26th, 2011 - 11:52 am ICT by IANS
Miami, Oct 26 (IANS/EFE) Latin America is in a good financial situation, but the problems currently being suffered by the US and Europe pose a threat, a banker said.
“If the US problems and the euro crisis become worse and the key emerging economies like China and India decelerate, the situation could get complicated for Latin America,” Giorgio Trettenero, the general secretary of the Latin American Federation of Banks, or Felaban, told EFE Tuesday before speaking at the FIBA Risk Management Conference for the Americas in Miami.
The gathering of bankers, regulators and experts was organised for the first time by the Florida International Bankers Association (FIBA).
“Latin American banking shows a robust performance and managed to adequately confront the world crisis of 2008 and 2009,” Trettenero said.
In general, in the region there is low inflation, it is accumulating global reserves, the banking industry is solid, the fiscal position of the governments is better than 10 years ago and there are no difficulties in getting financing for the sovereign debt in the international markets, he said.
“In Latin America, the question of credit risk was managed with good levels of indebtedness and (in the mortgage area) very conservative policies were maintained. We were very prudent and the regulators (were) very demanding,” Trettenero said.
However, he went on to say that there are factors that pose a risk for the region’s financial situation.
One is the crisis in Europe, where the governments “became very indebted over the past five years”, which along with low growth, the fall-off in tax receipts and the lack of flexibility in public spending “have led to the debt payments of some countries being seen as difficult”.
When those difficulties begin to affect individuals “it’s obvious that what comes after that is a contraction in domestic consumption”, something that, in turn, can wind up affecting European imports of products from Latin America.
With regard to the US, Trettenero said that “there is still no credible plan” to resolve the country’s fiscal problems and he warned that Mexico is greatly dependent on the US economy.
Along those lines, he hailed the fact that Mexico has announced counter-cyclical policies geared toward increasing spending and thus maintaining domestic growth.
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Tags: american banking, american federation, banking industry, conservative policies, credit risk, debt payments, domestic consumption, emerging economies, european imports, felaban, fiscal position, global reserves, latin america, latin american, management conference, public spending, robust performance, sovereign debt, tax receipts, world crisis