“The industrial countries suffer from high oil prices, whereas the emerging markets benefit.” This thesis does not match reality as most emerging markets have to import oil.

The battle for increasingly scarce foodstuffs is intensifying, sparking demonstrations, export restrictions and crisis meetings at the highest level. Whereas the soaring prices are clearly bad news for most of theworld’s regions, they are much more positive for Latin America.

The US economy is swooning. What are the implications for its southerly neighbors who have long benefited from the USA as the engine of the world economy? Will Latin America be infected and how severe will the impact be?

The Latin American economy is currently purring. The export sector is enjoying a substantial fillip from the ongoing commodity boom and this is increasingly feeding through to domestic demand.

In a carry trade you take out a loan in a currency with the lowest possible interest rates and convert the liquidity into a currency in which bank deposits and short-term money market instruments return high yields.

In recent weeks Brazil has also been affected by the jitters on international financial markets: yield premiums on Brazilian foreign bonds crept up, the Real slipped by a good 10 % against the US dollar and the Brazilian stock market tumbled.

The interest rate hikes by the central banks of the major currency nations have put pressure on the currencies of a number of emerging markets and caused spreads on the international bond market to drift up again slightly. Following the euphoria of recent years, this has prompted the prophets of doom to herald the approach once again of a new emerging market financial crisis.

On February 5, some 2.5 million Costa Ricans are called upon to elect their new president.

Are we in for more turbulent times again? 2006 sees a plethora of election dates in Latin America. In the past this has tended to send jitters through economists and investors, resulting in considerable financial upheaval.

2006 is election year in Latin America. More than twelve parliamentary and/or presidential elections are to be staged this year in Central and South America. Such an accumulation of election dates is enough to send jitters through most economists and investors. The anxious months leading up to the last Brazilian presidential election in 2002, when Lula's looming election victory spawned panic among the business community, have not been forgotten. Even if ultimately unfounded, the possibility of a change in government in Latin America has frequently cast doubt over the progress achieved, triggering considerable financial upheaval and capital flight.

At present the political news coming out of Latin America is on the grim side. In Brazil President Lula is embroiled in a corruption scandal. In Argentina President Kirchner is doggedly refusing to cooperate with the IMF. However, Latin American assets have so far not suffered, with capital continuing to flow into the region. But caution is advised.

Since the crisis year 2002, Latin America's economy has clearly stabilized. 2004 saw buoyant growth and the outlook for this year is also positive. However, although progress has been made on many fronts, there is evidence that reform weariness is rearing its head again in some countries.