Risk of U.S. default worries Latin American ministers
The growing risk of the United States defaulting on its debt worries many Latin American countries who are fearful of damage during the global economic recovery, according to several ministers from across the region on Thursday.
“It’s a topic that worries all of us,” said Chilean Finance Minister Felipe Larraín.
“It’s a problem for the United States, but at its worst it could kill the recovery of this economy, and that would have a powerful effect for the rest of the world,” Larraín added during a visit to Washington, D.C., at the assembly of the International Monetary Fund and the World Bank.
“It would be a strong blow to the global economy. It would probably reduce growth in the United States and could affect our growth prospects for the coming year,” said Peruvian Finance Minister Luis Castilla.
According to the IMF, Latin America could close 2013 with a 2.7 percent growth rate, less than hoped for in July. The Fund, however, expects a rebound next year and estimates a 3.1 percent growth rate for the region.
The ministers expressed their concerns face-to-face with U.S. Treasury Secretary Jacob Lew at a meeting of finance ministers from the Americas on Wednesday in Washington, on the sidelines at the IMF-World Bank assembly.
“We said that this is a subject that really worries us a lot,” Larraín said.
“He was receptive […] but I think that each sector is digging its trenches, there’s no pending agreement and time is running out,” he said.
An eventual default on U.S. debt first would affect commercial relations with Latin American countries but also could provoke a jump in interest rates over the long term, something that “especially” worries Larraín.
“There’s too much to lose and rationality must prevail,” added Castilla. Castilla and Larraín participated Thursday in a forum of the Alliance of the Pacific, an integration bloc made up of their countries and Colombia and Mexico, together with the Colombian finance minister, Mauricio Cárdenas, and Mexican Finance Vice Minister Fernando Aportela.
You may be interested
Transformational travel in Costa Rica: Turning the flat world roundAlissa Grosskopf - October 16, 2018
The sound of roaring water and the fear in my body drown out the encouraging shouts of my group behind…
Children: the future of shark protectionAlissa Grosskopf - October 16, 2018
The nonprofit organization Misión Tiburón is strongly engaged in the protection of hammerhead sharks in Costa Rica. They hope to…
Trump warns Honduran president to stop migrants en route to U.S.AFP - October 16, 2018
WASHINGTON, D.C. – U.S. President Donald Trump warned his Honduran counterpart on Tuesday that he must stop a caravan of…