Countries that have built much of their economies around exporting commodities to China are vulnerable, and several of them have prepared themselves for the eventual commodities downturn.
Strong sales of metals and private investment helped Peru grow at China-like rates in past years, and foreign companies have pledged another $15 billion in investment since President Ollanta Humala took office almost a year ago. In spite of lower commodity prices, Humala said this week that Peru's relatively low debt levels and high international reserves would help the country ride out the crisis. Economists project growth of 5.5 percent this year, down from 6.9 percent last year.
So far, Brazil has responded to the slowdown with measures such as reducing its benchmark interest rate and taking measures to weaken the Brazilian real, which helps exporters.
Finance Minister Guido Mantega has also announced measures to boost domestic consumption: targeted tax cuts on Brazil-made products, interest rate reductions and an extension in the time allowed to pay back loans. The measures will make local cars about 10 percent cheaper, and reduce taxes on financial transactions. These measures have had some immediate impact.
Car dealerships such as Euro Barra in Rio de Janeiro saw sales of their locally made Fiats shoot up by 40 percent in May, with lines stretching out the door as consumers came in hoping for a deal and an easier time paying back their loans.
Their enthusiasm didn't last long, said Euro Barra general manager Antonio Carlos Maciel Junior.
Within two weeks, movement in the dealership was back to normal. That's because it's still hard to qualify for a car loan in Brazil, he said. Buyers have to put down half a new car's total cost to benefit from the lower rates. Others still pay 10 percent to 12 percent interest a year, he said.
"The government is going in the right direction, stimulating sales," said Maciel Junior. "But the banks are still hesitant. The government took steps on this that the banks haven't followed. They need to relax rules around lending as well, make it easier for people to borrow."
Taking advantage of her high approval ratings, Rousseff is also pushing through public pension reforms that had been unpalatable to her predecessors, said Joao Augusto Castro Neves, an analyst with the Eurasia Group consultancy
Even as the world warily watches Brazil and the rest of Latin America, Rousseff says her country has indeed turned a corner and is not about to go back to the bad old days of hyperinflation and economic meltdowns.
"This is a protection against whatever may happen in the international financial system," Rousseff said of the country's healthy reserves. "In years past, when the world sneezed, we caught pneumonia. That's no longer the case."
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