U.S. News --- THE OUTLOOK: Tide Reverses in Latin America
The divergent fortunes of global emerging markets can be told through Latin America's two biggest economies: Mexico and Brazil.</br></br>Think of it as a tortoise-and-hare story. For the past decade, Brazil has boomed by selling raw materials to China. Its expanding middle class gorged on a tide of cheap credit unleashed by central banks in advanced economies as they tried to energize their recoveries.</br></br>Brazil's economy averaged 3.6% annual growth over the past decade, peaking at a 7.5% pace in 2010. Its currency surged in value.</br></br>All the usual signs of excess were in evidence: Brazilian shoppers cramming stores in New York and Miami; news stories reporting $30 cheese pizzas and $35 martinis in Sao Paulo.</br></br>By comparison, Mexico has seen lackluster growth, partly because it has been tied to a struggling U.S. economy. It has also suffered from deep problems of its own: laws that banned foreign investment in energy, a dysfunctional tax code, a tattered education system and hidebound economy dominated by a handful of near-monopolies. And it suffered a surge in drug violence, deterring tourists and investors.