Analysis of crises in related economies on the example of Latin American countries

Abstract

This article provides an analysis of the key macroeconomic and financial indicators of Latin American countries in 2020–2022. The objective is to periodize the behavior of economic indicators in the connected economies of developing countries. The relevance of the study lies in the need to understand the mechanisms of behavior of economic entities in crisis situations. Latin American countries were chosen as a model for the study because they are characterized by a high degree of connectivity, as they all fall into the category of developing countries and differ significantly in the behavior of regulators in crisis conditions. Based on the objective, the analyzed period for the region under consideration was conditionally divided into four stages: the initial panic of 2020, the period of the beginning of recovery at the end of 2020, the recovery of economies against the background of rising inflation in 2021, and a decrease in recovery growth due to instability in 2022. The methodology shows general trends and characteristic deviations caused by general and specific factors. General trends describe the behavior of economic indicators in the selected four stages of the crisis. The deviations show how related economies react to general external shocks in specific conditions. For example, the size of the economy and domestic economic policy have shown themselves as specific factors. The results show that Brazil’s larger economy was more affected by the inflationary shock and took tougher measures with regard to the central bank rate. Throughout the crisis and the subsequent period, Mexico demonstrated a lower unemployment rate and a lower level of government budget losses.