Looking around the Hemisphere today we can see that our caution was well-grounded. We have seen another dramatic downward spiral in commodity prices. These major shocks will take their toll on the region for some time to come and no country will be left untouched. But past policies made some countries more vulnerable to these shocks than others. Further steps to build up these economies' defenses will only help them continue to ride out the storm.
Brazil can succeed only with resolute pursuit of sound and strong fiscal and monetary policies.
But these steps, along with the removal of past exchange rate pressures and the return of capital as normal conditions are restored, should provide a basis for the reestablishment of confidence and growth in a country that, on some measures, achieved the fastest average rate of growth in the world in the hundred years before 1980. In this context the indications of support for sound policies in Brazil that have been received in recent days from both the private and the public sector have been encouraging. Other economies, notably Ecuador, will face perhaps even steeper challenges in the months ahead as they work to achieve stability. What will be critical will be to resist mis-diagnosis. It would be a mistake if the external element allowed the more important and fixable domestic roots of the crisis to go unaddressed.