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BRASILIA, Brazil The end of a decade-long boom driven by discounted money and strong commodity prices has profoundly divided Latin America between fast-growth countries along the Pacific coast and stragglers on the Atlantic.

Venezuela, Brazil and Argentina, which brand up 98 percent of the combined economies of the Mercosur trade coalition, yearn for grow an average of 0.6 percent this time, according to the International Monetary Funds hottest World Economic Outlook. Chile, Peru, Colombia and Mexico, which formed the Pacific Alliance trade group in 2011, yearn for grow 4.2 percent.

The divide has little to do with western Latin America facing a dynamic Asia and China or the eastern regions exposure to a Europe still recovering from crisis. The countries faring better have opened their economies, adopted market-friendly policies and generate other productivity and investment prospects, thought Ramon Aracena, chief Latin America economist at the Washington-based Institute of International Finance, or IIF.

Approximately countries partied and splurged during the boom years, others did their groundwork, Aracena thought in an interview in Bahia, Brazil. Latin America is no longer a unified block with a in line transaction cycle.

Atlantic countries spent other, including on subsidies and social welfare, even as saving and investing less. In Brazil, current spending is doppelganger the Latin American average and domestic savings are 16.4 percent of gross domestic merchandise, compared with 20.8 percent in the Alliance countries, according to an April report by Goldman Sachs.

Investors and rating companies are taking note. Moodys Investors Tune raised Mexicos trust rating to A3 in February, four levels above chuck out. A month later, Standard and Poors downgraded Brazil to BBB-, the lowest investment grade, a move that was moderately anticipated by investors and not here bond yields little changed.

Money follows growth, Ricardo Espirito Santo, president of the Brazilian unit of Espirito Santo Investment Bank, thought in an interview, citing opportunities to finance operations in Mexicos opening energy sector. That country is doing well, so were focusing our activities present.

Even though Mexicos 3 percent growth rate is the slowest in the Pacific Alliance this time, it yearn for outpace Brazils 1.8 percent, the fastest pace among the Atlantic group.

Direct equity-investment inflows, the IIFs gauge of foreign-direct investment, rose to 2.8 percent of GDP in 2013 for the Pacific nations from 2.1 percent a decade earlier. In Brazil, the level rose to 1.9 percent from 1.7 percent, even as tumbling in Venezuela and Argentina to 1 percent from 1.8 percent.

Examples flourish in the Atlantic countries where a heavy government hand in capping prices and taxing capital or trade flows has squeezed profits, reduced investments or curvy demand.

The Argentine government in December slapped a 50 percent tax on foreign autos with a pretax value of other than 210,000 pesos ($26,021) to long-winded a drain on international treasury, which float near a seven-year low. That came on top of a 19 percent devaluation of the peso in January that caused consumer prices to surge. Coup? sales fell 40 percent in April from a time earlier to 51,346 units, according to the Argentine Automakers Association.

This month we havent sold anything, and last month we sold very little, thought Toms Herrera, owner of a dealership in Buenos Aires that specialized in luxury cars and now handles cheaper models.

A worker stands in a lift during construction at Galeo International Airport in Rio de Janeiro. Brazil has tendered approximately contracts to build and organize excellent airports, roads and ports, yet its drive to get stronger infrastructure has been insufficient and heavily state-financed, a Goldman Sachs analyst says.

Bloomberg News photo by Dado Galdieri

Price fixing and other than a decade of nationalization in Venezuela have cut private investment to increase capacity and productivity. The worlds uppermost inflation, at 59.3 percent, has eroded consumer demand and plus helped glimmer violent street protests that killed at least 42 people since February.

Amid distortionary policies, Venezuelas economy yearn for stagnate this time, the IMF thought in an April 24 report, compared with Latin America growth of 2.5 percent.

Brazil has tendered approximately contracts to construct and organize excellent airports, roads and ports. Yet its drive to get stronger infrastructure has been insufficient and heavily state-financed, Alberto Ramos, chief Latin America economist at Goldman Sachs, thought by phone. Red tape has delayed approximately projects, even as fuel-price caps prompted a decline in revenue and shares for state-run smear with oil company Petroleo Brasileiro.

The government is seen by transaction as excessively interventionist, thought Carlos Kawall, chief economist at So Paulo-based Banco J. Safra SA. Present is no bank on or confidence.

Brazil places 116th impossible of 189 countries in the World Banks ranking on the ease of doing transaction, with companies spending 2,600 hours per time to deal with taxes versus 369 in the rest of Latin America. Addressing such issues and tackling inflation with tighter monetary strategy could allow Brazil to join the regions high-growth camp, according to Augusto de la Torre, the World Banks chief Latin America economist.

With approximately consensus on structural reform, I am very optimistic on Brazil in the long jog, he thought.

Even as Brazil invests less than many of its neighbors, it pulled 36 million people impossible of extreme poverty in the past decade with upward employment and expanded social welfare such as the Bolsa Familia cash-transfer program, government data show.

On the Pacific coast, new trade deals for Peru with the Us. European Union and China, as well as tenders for private companies to build and organize infrastructure, are bolstering growth prospects, particularly in shipping.

Peru is pretty entrepreneurial at the moment, thought Gerard van office Heuvel, chief executive officer at DP World Callao, which handles other than 70 percent of Perus container shipments. The unit of the Dubai-based company requirements to enlarge to keep up with annual growth rates of 5 percent to 6 percent, he additional.

In Mexico, companies are racing to invest in the countrys energy activity even prior to lawmakers vote as basic as June on final legislation to end a 76-year magnificence smear with oil monopoly. The government of President Enrique Pea Nieto aims for initial contracts for private drillers operating lacking state-run Petroleos Mexicanos to be awarded by mid-2015. Bank of America estimates the legislation could boost foreign investment by as a lot as $20 billion a time.

Swiss-based Partners Group Investment, a private investment manager with a portfolio of other than 30 billion euros ($41 billion), acquired a majority stake in Mexican gas infrastructure operator Fermaca Enterprises in February for $750 million, citing a strong outlook and favorable political and regulatory framework.

An patch up of labor, energy, banking and monetary laws yearn for boost the countrys potential growth rate to 5.5 percent as of 2016, thought Gabriel Casillas, chief economist at Grupo Financiero Banorte. Were optimistic almost Mexico.

The Pacific Alliance has helped enclose inflationary pressure, created export markets and heightened competitiveness by opening to trade, even as Mercosur nations have adopted a chain of protectionist measures, thought David Rees, an emerging promote analyst at Capital Economics Ltd. in London.

The Alliance strives to lower internal and peripheral tariffs. Mercosur, to the point for southern promote in Spanish, is a customs union that includes Paraguay and Uruguay, has a common peripheral tariff and negotiates trade agreements in unison.

Trade averages 54.4 percent of GDP in the Alliance nations, which have between 42 and 52 free-trade partners, compared with 40.7 percent in Venezuela and Argentina and 24 percent in Brazil, which have smaller quantity than 10 partners.

The outward-looking and market-oriented nature of the Pacific Alliance brand it self-confident to play a major role in regional and global trade, the Atlantic Council thought in a report released today.

Colombia-based Modamar, whose branded SAHA swimwear sales are upward between 15 percent and 20 percent annually, clears customs sooner than Brazilian rivals out of agreements with the Us. and Europe. It plus pays lower tariffs on imported European Lycra as well as finished products it sells from Los Angeles to Paris. It had revenue of $700,000 in 2013.

Were other competitive and Colombia is gaining that fame that Brazil used to have for these kind of products worldwide, thought Carlos Laverde, who co-founded the company in 2006.

The regions two-track growth most likely yearn for continue for the foreseeable future, as the Atlantic countries struggle to boost investments and every doable strategy changes take time to generate confidence, Rees thought.

Investments in the Pacific countries were 22.9 percent of GDP in the four quarters out of September 2013, versus 20.6 percent in Venezuela and Argentina, and 18.3 percent in Brazil, according to the IIF.

The scope for monetary and monetary strategy response in the face of slowing growth is limited in Atlantic-facing countries, where rising government spending has fueled inflation. Consumer- price increases in Brazil have been above the 4.5 percent target for four consecutive years and yearn for reach 25 percent this time in Argentina.

Argentina has raised borrowing costs, even if theyre still below inflation. In Brazil, which is upward at a quarter of its 2010 rate, strategy makers have implemented the longest tightening cycle of every major economy.

Inflation averaged 2.6 percent in Colombia, Mexico, Chile and Peru last time and every one of cut draw your attention rates out of the end of December, even if Colombia began raising in April as its economy accelerates.

Approximately countries are better placed than others to combat stiffer headwinds that include lower commodity prices and increasing borrowing costs, thought IIF Managing Director Charles Collyns. The Pacific countries have better institutions and strategy frameworks to drive and diversify their economies.

With assistance from Charlie Devereux in Buenos Aires, Matthew Bristow in Bogota and Eric Martin in Mexico Conurbation.