South American countries are struggling to make ends meet, as nearly every country in the region is facing hyperinflationary currencies and incredibly tight capital controls. Moving funds in and out of these countries is all but impossible for most citizens, forcing them to look for alternatives. Bitcoin is gaining ground in these countries, even though Mexico might be on the mend.
Also read: Australian Banks Don’t Like Bitcoin
Mexico Survives The Economic Havoc in South America – For Now
The continent of South America is going through an extremely rough patch this year. Most of the major fiat currencies, including Argentine Peso and Brazil Real, are plunging in value on a weekly basis. To make matters even worse, commodity prices in South American countries are hitting new lows, and a stock market sell-off occurred earlier this year.
Despite these odds, Mexico’s country is growing for the first time in years, even though it is just a small uptrend in an otherwise sea of negativity. Unemployment is falling in the country, which is a positive trend for citizens, as they will regain a proper source of income for the time being. Plus, Mexico’s debt ceiling was upgraded earlier this year, buying the country some time to get things in order once again.
Financial experts predict Mexico’s economy will grow by roughly 2.5% this year, which can be partially attributed to the stock market doing slightly better. Don’t be mistaken, though, as the IPC – Mexico’s stock market – is barely in the green for the entire year so far, but compared to other countries, it is doing rather well.
Reforms made by Mexican government officials many years ago are finally starting to pay off, leading to a 4.3% decrease in unemployment numbers. These reforms include minimum-wage changes, labor union transparency – something that was desperately needed – and women’s worker rights. Furthermore, Mexico has some oil fields that have been opened up to international investors, slowly but surely breaking the monopoly maintained by local businesses.
All of these factors are contributing to a temporary success for Mexico, but the country is not out of the woods just yet. There are still a few dozen topics of debate that need further clarification, and investor funds are still flowing out of Mexico more quickly than it is coming in. But the country is not doing as bad as Brazil, a region where Bitcoin adoption is thriving.
Brazil’s Economy Crumbles, Bitcoin Adoption Soars
Brazil is one of the many South American countries where things are getting progressively worse over time. While the country was South America’s biggest economic success story in recent years, things have taken a turn for the worse, as the economy is in recession. On top of that, the debt level has been reduced to “junk status”, and there is no light at the end of a long and dark tunnel.
Mexico will not be overtaking Brazil as South America’s biggest economy anytime soon, but the gap is being closed as we speak. Brazil’s stock market – called Bovespa – is down by nearly 8% this year, and unemployment is sitting at 7.5% of the total population.If this trend continues, the unemployment percentile will hit double digits in 2016.
But there is hope for Brazilians as well, as Bitcoin seems to be gaining more widespread adoption in the country. The initiatives started out small and localized, but there are over 150 businesses in the country accepting Bitcoin payments for services and goods. Bitcoin is a borderless virtual currency, not regulated by central authorities or banks, making it a perfect alternative to fiat currency in the region.
What are your thoughts on the South American economy? Do you see Bitcoin becoming a viable alternative to fiat currency, and if so, in which countries? Let us know in the comments below!
Source: CNN Money
Images courtesy of Shutterstock, Hispanically Speaking News
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