Why South American economies are rebounding first

A drop in remittances (money that migrant workers send home from the US) is also hurting both Mexico and Central America.

Remittances are an important crutch for millions of Mexican families, and the US recession is a major factor in fewer remittances. This is especially true in the construction industry, which has traditionally employed some 20 percent of Mexican migrant workers.

The Inter-American Development Bank estimates that remittances to Latin America and the Caribbean will fall by 11 percent this year.

Despite Latin America's resiliency, the crisis has left millions in poverty after years of gains.

From 2003 to 2008, 60 million people in the region emerged from poverty. Today, the World Bank estimates that 8 million people will return.

In Mexico, between 2006 and 2008, poverty increased by 5 percent after years of gains, according to government figures.

Alberto Aziz Nassif, a specialist in democracy and civil society at the Center for Research and Higher Education in Social Anthropology in Mexico City, says poverty will undoubtedly grow this year.

"The crisis has deteriorated the well-being of many Mexican families," Mr. Nassif says.

Mexico is not alone in dealing with the ramifications of the crisis on its most vulnerable populations.

The United Nations' Economic Commission for Latin America and the Caribbean (ECLAC) says that unemployment in Latin America and the Caribbean rose to 8.5 percent in the second trimester of 2009, and a decline in foreign direct investment – as well as remittances – is complicating the poverty reversals for the region.

Brazil's middle class growing, and better off

The poor are faring better in Brazil. Although industrial output fell heavily and jobs were lost, economists say the crisis was light and the rebound is strong.

The rural poor are only slightly worse off than they were this time last year, while the urban poor are in a marginally better position, according to Marcelo Neri, a leading economist with the Fundacao Getulio Vargas in Rio de Janeiro.

"Income inequality underwent a serious deterioration in January, when part of last year's gains were lost, but it has now come back closer to its precrisis levels," Mr. Neri wrote last month.

Brazil's middle class is 2.5 percent better off than it was 12 months ago and now comprises 53 percent of the population, the highest percentage in years, Neri added.

There are concerns. Brazil's extraordinarily strong currency, the real, is starting to worry exporters; interest rates, while at their lowest level in decades, are still among the highest in the world. And more and more workers are asking for – and getting – above-inflation-rate pay raises, reawakening old fears about inflation.

Brazil's recovery also reveals old patterns.

Relying on sales of commodities to pull the country out of recession might help GDP prospects, but it does not buoy all people or sectors.

"It's certainly a net positive that the region is going to recover quicker and faster … the global economic crisis did not hit it as much as it could have in the past," Mr. Farnsworth says.

"But [commodity growth] is primarily capital-intensive," he cautions. "It takes billions of investment [dollars], but the number of jobs is not terribly high compared with other sectors."

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