Poor countries are still reeling from the impact of high grain prices, which doubled at the height of the food crisis. Although prices have declined somewhat in real terms, they remain 17 percent higher than two years ago, according to the FAO report.
The FAO report said that the recession was still growing, but it was too early to assess the extent of its impact. Many countries have seen an across the board reduction in trade and financial flows, reducing employment opportunities and the amount of money available for government programs.
The 17 largest Latin American economies, for example, received $184 billion in financial inflows in 2007, which was roughly halved in 2008 to $89 billion and is expected to be halved again to $43 billion in 2009, the report said. This means that consumption must be reduced, and for some low-income food-deficit countries, adjusting consumption may mean reducing badly needed food imports and other imported items such as health-care equipment and medicines.
The Merco Press indicates the same dismal results for the Latin American country of Argentina:
Argentina’s August trade surplus dropped 48% from the same month a year ago to 1.16 billion US dollars as exports sank, the government said on Friday. Imports fell by 37% during the month to 3.25 billion, while exports dropped by an even bigger 40% to 4.40 billion USD due to lower prices and reduced volumes, particularly by the drought-hit farming industry.
Sales of manufactured agricultural goods, which include top export earners soy-oil and soy-meal, fell by 35% during the month. Overall volumes of agricultural goods fell by 26%, while prices dropped 16%.
The recession has brought about strange feelings from many Argentinians because they just escaped a catastrophic currency and economic collapse that lasted from 1999 to 2002, and continued until 2005 that was brought about by unsustainable foreign debt, bad banking policies, and hyper inflationary monetary printing brought about by their central banking system. The central bank started buying dollars in the local market and stocking them as reserves. By December 2005, foreign currency reserves had reached $28 billion (they were greatly reduced by the anticipated payment of the full debt to the IMF in January 2006).
Latin american countries fed-up with US dollar
Local currencies, which were once very popular during the Great Depression of the 1930s when federal funds were insufficient in number, are experiencing a renaissance in Latin America, but for new reasons. In the last decade many small towns and inner-cities have discovered that local scrip, which helped define the regional trade areas, to educate consumers about local resources and builds community.
Just recently, 9 countries have decided to “ditch” the US dollar as preferred method of exchange and decided to establish their own local currencies in frantic efforts to avoid inflation.
Excerpt from: upside down world in April ‘09
During the meeting Chávez said that the SUCRE, which stands for the Unified System of Regional Compensation (Sistema Único de Compensación Regional), “will be much more than a currency.” According to Chavez, the Sucre system will have four branches: The Regional Monetary Council, The Sucre currency itself, the Central Clearing House, and a regional reserve and emergency fund.
“This will help us to overthrow the dictatorship of the dollar, imposed on us from over there, from Bretton Woods,” said Chávez.