Latin America is still roaring ahead on the back of a commodity boom. By the end of 2007, the region had amassed about $400bn in foreign currency reserves, according to the International Monetary Fund. How these inflows came about is indicative of the economics of each country.

In Argentina, Venezuela and Chile, commodity sales were the main reason. In Mexico and Colombia, the build up happened mainly on the back of capital inflows. Foreign investors are welcomed with open arms, which is not the case in either Argentina or Venezuela. In fact, foreign banks in Venezuela are living under a regime of creeping nationalisation.

Brazil’s progress is based on an ever-more diverse economy that is resulting in net migration flows from the US because of the many job opportunities that are a product of the steadily growing economy. Its much-anticipated move to investment grade was absorbed by the markets with barely a blip.

The million-dollar question for many of the Latin American countries that are heavily dependent on remittances – not least Mexico – is how badly the US slowdown and possible recession will affect them. So far, proponents of the ‘decoupling’ theory can point to a region that has diversified where its exports go to, from being entirely dominated by North America to adding in Asia. Meanwhile, inflationary pressures are a major problem.

For the banking sector, 2007 was an excellent year, with the growing middle classes taking up more products, interregional mergers and acquisitions, as well as a corporate sector that is moving abroad.

That is evident in how the top bank this year in the regional list, Banco Bradesco, has seen its Tier 1 capital rise to $17,151m from $11,527m last year, while it has gained 16 places in the world ranking. Both its Brazilian counterparts, Banco Itaú and Unibanco, showed similar strong performances.

Bancolombia was a major mover, up to seventh place regionally compared with 13th last year, as it took advantage of a strong balance sheet and a solid domestic economy to make acquisitions.

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