Mexico is Latin America winner, while Brazil spirals

Mexico's economy also isn't as tied to commodities like oil as Brazil.
Mexico’s economy also isn’t as tied to commodities like oil as Brazil.

By Patrick Gillespie / CNNMoney

Brazil is in a political crisis and severe recession. Its president, Dilma Rousseff, could be impeached this year. Brazil’s debt has also been downgraded to junk status.

Meanwhile, Mexico is growing, politics are relatively stable and its debt was upgraded in 2014.

“Right now Mexico and Brazil are as different as they come, this is day and night,” says Alberto Ramos, head of Latin America economic research at Goldman Sachs.

Mexico’s economy grew 2.7 percent between January and March compared to a year ago, according to government figures.

That’s not stellar growth but it’s a lot better than Brazil’s economy, which shrank 3.8 percent in the fourth quarter last year and its central bank estimates the economy will contract 3.5 percent this year.

Experts say this divergence between Latin America’s two top players results from two very different strategies: populist policies with lots of public spending versus economic reforms, spending cuts and a diverse economy.

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