The Latin American Debt Crisis Erupts
- Date
- 1982
- Category
- Economy & trade
- Region
- Latin America (Mexico)
- Era
- Contemporary
- Significance
The Latin American debt crisis erupted in 1982, plunging the region into a "lost decade" of economic stagnation.
On 20 August 1982 Mexico's finance minister announced the country could no longer service its foreign debt of some $82 billion owed to roughly 1,400 banks, a default that stunned global markets. The crisis had been building as Latin American governments borrowed heavily through the 1970s, then were caught by the sharp rise in U.S. interest rates under Federal Reserve chairman Paul Volcker and by collapsing commodity prices. When banks stopped lending, Brazil, Argentina, Peru and others found themselves unable to refinance. The result was years of austerity, currency collapses, soaring poverty and negative growth; per-capita income across the region fell roughly ten percent during the decade. Successive rescheduling deals, structural-adjustment programmes and the later Brady Plan reshaped economic policy toward market liberalisation. The crisis discredited state-led development models, entrenched the influence of the IMF and international creditors, and left a legacy of inequality and instability that shaped Latin American politics for a generation.
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Empires active in 1982
- Soviet Union1922 CE – 1991 CE
- British Empire1583 CE – 1997 CE
- Portuguese Empire1415 CE – 1999 CE
- Yugoslavia1918 CE – 1992 CE
Related economy & trade events
- China's Reform and Opening-Up Begins Under Deng XiaopingDecember 18, 1978
- The global financial crisis and the collapse of Lehman Brothers15 September 2008
- China Opens Its First Special Economic Zones1980
- Japan's Asset Bubble Peaks as the Nikkei Hits Record1989
- India's economic liberalisation begins24 July 1991
- Deng Xiaoping's Southern Tour1992
Further reading
The wider story
The Silk Roads: A New History of the World
Best-selling world history told through the trade routes that moved goods, faiths and ideas.
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