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Former Mexican President Carlos Salinas spent six years rebuilding confidence by making a stable peso the cornerstone of his economic policy. It took less than a month for newly-installed President Ernesto Zedillo to wipe all that out.

By abruptly devaluing the peso last month, Mr. Zedillo reminded the foreign companies that had been lured back why they had reservations about doing business in the Latin America in the first place.

Already, U.S. policymakers are talking about rethinking trade policy and multinational advertisers in Mexico are talking about putting their 1995 plans on hold.

The outlook is bleak, considering the President Salinas-created illusion of stability was funded with borrowed money and on borrowed time.

It's the Mexican citizens who will be most hurt. Even with the promise of outside help, they face deep recession.

They're cancelling vacations as discretionary spending dries up entirely. And the few luxuries they were able to afford for the first time in their lives will be out of reach for who knows how long.

Planning to buy a new car, the first for many, or a new TV or VCR will be out of the question.

Living from hand to mouth might be an exaggeration of how many in the middle class will have to exist for the forseeable future. But it is not an overstatement that Mexicans have lost a great deal of purchasing power as the value of the peso plummeted by close to 40% within a month's time. The 1.5% to 2% growth now predicted for 1995 means a decline in per capita income since those percentages are below the population growth.

If there is any good news to come out of this calamity, it's that marketers are apparently becoming more sophisticated in how they deal with the Latin region. Pan-regionalization aside, they aren't lumping all countries together and considering retrenching en masse.

That's a good thing, especially since some other Latin American nations aren't in the same boat. Indeed, some are experiencing real growth spurts.

Take Brazil. Typically economically and politically volatile, there has been a smooth transition to a new administration under Fernando Henrique Cardoso. His inauguration as president this month is accompanied by euphoria about the country's future. Brazilians feel secure under the watchful eye of the former finance minister, who rode to victory on the success of his plan for a stable currency, the new real.

His policy tamed Brazil's legendary inflation from 80% monthly to a manageable 4%. And he has inspired confidence in marketers which plan to push ad budgets to record levels in 1995.

The events of the past month show that Latin America as a region still has some vulnerable links. But it's encouraging that while the collapse of the Mexican economy has stunned some other nations in the region, there hasn't been an immediate domino effect.

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