Virtually all Latin American countries share similar problems: uneven economic growth, unacceptably high poverty andmalnutrition rates, and lagging agricultural growth. More than 60 percent of the region’s poor live in rural areas, where slow economic growth, unequal distribution of assets, inadequate public investment and public services, and vulnerability to natural and economic shocks are major policy issues.
The 2007–08 food price crisis exacerbated these problems. Prior to the crisis, the region was considered relatively stable and capable of absorbing external shocks, thanks to its higher foreign exchange liquidity; decreased public sector and external borrowing needs; exchange rate flexibility; lower exposure to currency, interest rate, and rollover risks in public sector debt portfolios; and improved access to local-currency loans. Nevertheless, the food price crisis severely affected most of the Latin American countries in terms of inflation, especially food inflation.