Lima: After a decade of strong economic growth, Latin America and especially its powerhouse Brazil are sputtering, a symbol of the slowdown in emerging markets worldwide as commodity prices slide.

The region will be in the spotlight next week as the International Monetary Fund and World Bank hold their annual meetings in Lima, Peru bringing together finance ministers and central bank chiefs from around the world.

They will discuss a global economy that is stuck in a rut and badly missing the emerging markets boom that salvaged world growth during the 2008-2009 crisis.

With the exception of India, the emerging markets are now struggling, led on a downward plunge by long-time growth engine China.

Latin America, where some 56 million people exited poverty during a “golden decade” of growth, has been hit hard by the slowdown.

“Latin America is arriving (to the meetings) in a vulnerable, delicate situation,” said Peruvian economist Jorge Gonzalez Izquierdo, the country’s former labour minister.

“An economic slowdown, rising inflation and increasing currency devaluation, with the risk of people returning to poverty and a vulnerable middle class.”

The IMF’s new global growth forecast, which it will publish Tuesday, and a statement from the G20 finance ministers Friday will likely reflect the reigning pessimism on emerging markets.

In Latin America, the poster child for the downward trend is Brazil, the region’s largest economy and the world’s seventh, which has gone from emerging giant to basket case in five years.

The country entered recession in the second quarter and recently had its credit rating downgraded to junk status by Standard & Poor’s.

Brazil has relied too heavily on iron ore, soybeans, oil and other commodities to drive its growth, failing to diversify or save for a rainy day, critics say.

Now that a slowing China’s demand for commodities has fallen, the 7.5-per cent growth Brazil’s economy posted in 2010 has collapsed into a contraction that the government says could last through 2016, becoming the longest recession since 1931.

It is not alone in the region.

Latin America has long relied on its natural resources to drive growth, cycling from boom to bust as global prices fluctuate.

“Latin America’s greatest problem is that when it has the means it doesn’t do much with them. The countries in the region only act when they’re in crisis,” said economist Pedro Tuesta, a Latin America specialist at Washington-based consultancy 4CAST.

Worst in six years

Latin America’s growth will come in at 0.5 per cent this year, its lowest in six years, led by contractions of 1.5 per cent in Brazil and 5.5 per cent in Venezuela, predicts the Economic Commission for Latin America and the Caribbean, a United Nations panel.

“Smaller economies in the region like Peru, Colombia and Chile are more resilient, but not immune, because they are slowing and are also dependent on commodities,” said Alberto Ramos, Latin America research chief at Goldman Sachs.

Chile, the world’s top copper producer, is particularly exposed to the slowdown in China, the destination for 25 per cent of its copper output.

With the region in slowdown and the United States poised to raise interest rates for the first time since 2006, Latin American currencies have taken a beating in recent months, making imports more expensive and fuelling inflation.

The worst case is Venezuela, which has not published its official inflation statistics in months, but where experts say the annual figure is likely more than 100 per cent, which would be the highest in the world.

Venezuela, which holds the world’s largest proven oil reserves, has been devastated by crude prices that have plunged from around $120 a barrel in June last year to less than $50 now.

Other Latin American oil producers like Mexico, Colombia and Ecuador are also being pummeled.

The region “needs to launch a transition toward a new growth model that depends less on commodities and more on other sectors of the economy, such as productivity and investment,” said Alejandro Werner, director of the IMF’s Western Hemisphere department.