Latin America needs to improve its infrastructure, education and efficiency, experts say.
Even in the midst of the sunny outlook for Latin America, the risk of crisis lingers on the horizon, experts warned during a regional conference on the region. “Latin America really is booming; everyone wants to be in Latin America,” said Walter Molano, the head of economic and financial research at BCP Securities in Greenwich, Connecticut.
But Molano, a veteran financial analysts looking at the region, said Latin America must step up its efforts to compete globally. “Latin America still hasn’t done enough to modernize its infrastructure, to improve its education, to improve its efficiency,” Molano said. “If it doesn’t, this is going to be a great party with a really bad hangover.”
Speaking at the conference Forecast 2011: Economic and Political Risk Scenarios for Latin America, Molano said the region had very good economic numbers going into the global financial crisis.
FISCAL DEFICITS
Today, many countries in the region face a current account shortfall, fiscal deficits or the erosion of fiscal balances, overvalued currencies and in some cases rising consumer debt, Molano told the January 28 conference, hosted by the University of Miami’s Center for Hemispheric Policy.
The financial analyst said the greatest potential for economic risk was Brazil, where he warned the country needed to address its severe infrastructure deficit, especially since it will host the World Cup in 2014 and the Summer Olympics in 2016.
“Colombia and Peru are really the stars of Latin America right now – call it El Dorado,” he said. He said that the new government of President Juan Manuel Santos was focusing on reparations and restitutions in an effort to improve relations with neighbors and within Colombia, but did face the risk of an overvalued currency and had many infrastructure needs.
He called Peru a “very well-managed country,” which had successfully diversified its economy and exports. Molano called Peru “the California” of South America and said it had a surprisingly good infrastructure. In Chile, for instance, he said despite a good infrastructure in Santiago, the rest of the country needed better transportation.
VENEZUELA: A FAILED STATE
Molano called Venezuela “a failed state,” but added he saw no solution to the polarizing presence of President Hugo Chávez. “Chávez is a reflection of some of the problems that lie below the surface in Latin America,” he said, adding the region needs to address the infrastructure, education and need to improve social mobility – the result of conservative societies – or face more Chávez’s around the region.
This is a very big challenge, he said. “The conservatism is something that has been embedded in the region for 400 years.”
Molano was echoed by Cynthia Arnson, director of the Latin American Program at the Woodrow Wilson International Center for Scholars in Washington. Arnson outlined recent regional opinion polls, which showed that support for democracy was at one of the highest levels in decades. But Arnson noted that the region was not uniform. Mexico, Central America and the Caribbean were not sharing the same “rosy picture” – high economic growth numbers – as South America. She also noted that Peru scores the lowest in the region, with high levels of dissatisfaction with the system. “There are extreme vulnerabilities in the region,” Arnson said, adding that populism is a “reflection of profound problems,” especially the need for more social and economic inclusion.
Kathryn Rooney Vera, senior economist at Bulltick Capital Markets in Miami, said that Brazil was facing the growing imbalances in the current account deficit, set to reach some $64 billion this year, with risks of rising inflation and appreciation of the Brazilian currency. “The central bank has been aggressively intervening,” said Rooney Vera, adding that she expected investors to react at some point to “this hostile, anti-investment flow environment.”
MEXICAN REBOUND
Alfredo Thorne, the head of global markets for Grupo Financiero Banorte, said that Mexico was experiencing a strong rebound and had been gaining market share from China in the U.S. export market. The country was especially strong in advanced technology products.
Mexico was moving in the opposite direction from Latin America because of its close economic ties with the United States, Thorne said. “Mexico has moved away from Latin America,” he said. “It is not very simple to compare Mexico and Brazil."
Richard Feinberg, the director of the Asia Pacific Economic Cooperation Study Center at the University of California San Diego, said that he was concerned that President Barack Obama referred to approving the free-trade agreement with South Korea during his recent State of the Union but made only passing reference to trade and investment agreements with Colombia and Panama. “If I were the Colombians, I would say we are being left behind,” Feinberg said.
SEEKING PRODUCTIVITY
The former foreign minister of Chile, Alejandro Foxley, set the tone for the conference by calling for fewer meetings and treaties and more efforts to boost productivity and build a working infrastructure in the region, such as constructing roads to link the Atlantic and the Pacific oceans.
He also warned of political risks. “If we really want to be taken seriously by the rest of the world, and we really want to join the club of the advanced economies … I would think that there is no substitute for representative democracy,” said Foxley, now the president of the Corporación de Estudios para Latinoamérica in Santiago.
Source: http://www.latinbusinesschronicle.com
Monday, January 31, 2011
Sunday, January 30, 2011
Latin America needs a `Sputnik moment'
President Barack Obama's call for a ``new Sputnik moment'' in his annual State of the Union speech was a dramatic wake-up call for America. Now, he should expand the reach of his message, and turn it into a call to action for all countries of the Americas.
In his Jan. 25 address, Obama said the United States is falling behind other countries in education, science, technology and innovation. The United States needs to invest much more in science and technology programs, much like it did in the 1950s after the Soviet Union sent the Sputnik satellite into space, and Washington started the space program that eventually led to the first manned spacecraft to the moon, he said.
``The world has changed,'' Obama said. ``China and India realized that with some changes of their own, they could compete in this new world. And so they started educating their children earlier and longer, with great emphasis on math and science. They are investing in research and new technologies.''
``Just recently, China became the home to the world's largest private solar facility, and the world's fastest computer,'' he said. To succeed in this new environment, ``we need to out-innovate, out-educate and out-build the rest of the world,'' he added.
It was the centerpiece of Obama's most important scheduled speech of the year, and it carried a bold proposal: to drastically increase U.S. investments in education, technology and scientific research, while cutting almost everything else from the budget to reduce the giant U.S. budget deficit.
Obama called on Congress to fund the training of 100,000 new teachers in math, science and technology, as well as huge investments in biomedical research, information technology and clean energy technology.
Obama's speech should be required reading in Latin America, where despite an eight-year cycle of strong economic growth largely due to high world commodity prices, most countries are falling behind the rest of the world in education and innovation, but few are paying attention. Consider:
EDUCATION
• In the recently released Organization of Economic Cooperation and Development's PISA tests measuring 15-year-olds' proficiency in math, science and reading comprehension, China's city of Shanghai, Singapore and Finland occupied the first places. The United States ranked 17th, Spain 33rd, Chile 44th, Uruguay 47th, Mexico 48th, Colombia 52nd, Brazil 53rd, Argentina 58 and Peru 63.
• Only 2 percent of all world investments in research and development of new products are carried out in Latin America. By comparison, 36 percent take place in the United States and Canada, 32 percent in Europe, and 27 percent in Asia, according to Ibero-American Network of Science and Technology Indicators.
• All 32 Latin American countries together, including giants Brazil and Mexico, register less than 3 percent of the patents registered annually by just one Asian country, South Korea, according to the U.S. Trademarks and Patents Office.
PATENTS
In 2009, South Korea registered 8,800 patents, while Brazil registered only 103, Mexico 60, and Argentina 45.
• There is not one single Latin American university among the best 100 universities of the world ranked respectively by the British-based Times Higher Education Supplement and the Shanghai, China-based Jiaotong University, despite the fact that Brazil and Mexico are among the world's 12 largest economies.
• Many Latin American countries have the longest school vacations on earth. While the school year has 243 days in Japan and 220 days in South Korea, it has 200 days in Mexico and 190 days in Argentina, but -- when you include teacher strikes and unscheduled holidays -- it often numbers 160 days.
My opinion: If President Obama was searching for a theme for his Latin America policy, and for a concrete plan to take to the next Summit of the Americas to be held in Cartagena, Colombia, in April 2012, this is it. He should broaden his State of the Union address to include the whole hemisphere, and offer U.S. cooperation and know-how to improve education, science and technology standards across the region.
To grow steadily and reduce poverty at much faster rates, Latin America badly needs a ``Sputnik moment'' to wake it up from decades of complacency and declining education standards. Education, science, technology and innovation should not be just a U.S. obsession, but the new joint cause of the Americas.
Source: http://www.miamiherald.com
In his Jan. 25 address, Obama said the United States is falling behind other countries in education, science, technology and innovation. The United States needs to invest much more in science and technology programs, much like it did in the 1950s after the Soviet Union sent the Sputnik satellite into space, and Washington started the space program that eventually led to the first manned spacecraft to the moon, he said.
``The world has changed,'' Obama said. ``China and India realized that with some changes of their own, they could compete in this new world. And so they started educating their children earlier and longer, with great emphasis on math and science. They are investing in research and new technologies.''
``Just recently, China became the home to the world's largest private solar facility, and the world's fastest computer,'' he said. To succeed in this new environment, ``we need to out-innovate, out-educate and out-build the rest of the world,'' he added.
It was the centerpiece of Obama's most important scheduled speech of the year, and it carried a bold proposal: to drastically increase U.S. investments in education, technology and scientific research, while cutting almost everything else from the budget to reduce the giant U.S. budget deficit.
Obama called on Congress to fund the training of 100,000 new teachers in math, science and technology, as well as huge investments in biomedical research, information technology and clean energy technology.
Obama's speech should be required reading in Latin America, where despite an eight-year cycle of strong economic growth largely due to high world commodity prices, most countries are falling behind the rest of the world in education and innovation, but few are paying attention. Consider:
EDUCATION
• In the recently released Organization of Economic Cooperation and Development's PISA tests measuring 15-year-olds' proficiency in math, science and reading comprehension, China's city of Shanghai, Singapore and Finland occupied the first places. The United States ranked 17th, Spain 33rd, Chile 44th, Uruguay 47th, Mexico 48th, Colombia 52nd, Brazil 53rd, Argentina 58 and Peru 63.
• Only 2 percent of all world investments in research and development of new products are carried out in Latin America. By comparison, 36 percent take place in the United States and Canada, 32 percent in Europe, and 27 percent in Asia, according to Ibero-American Network of Science and Technology Indicators.
• All 32 Latin American countries together, including giants Brazil and Mexico, register less than 3 percent of the patents registered annually by just one Asian country, South Korea, according to the U.S. Trademarks and Patents Office.
PATENTS
In 2009, South Korea registered 8,800 patents, while Brazil registered only 103, Mexico 60, and Argentina 45.
• There is not one single Latin American university among the best 100 universities of the world ranked respectively by the British-based Times Higher Education Supplement and the Shanghai, China-based Jiaotong University, despite the fact that Brazil and Mexico are among the world's 12 largest economies.
• Many Latin American countries have the longest school vacations on earth. While the school year has 243 days in Japan and 220 days in South Korea, it has 200 days in Mexico and 190 days in Argentina, but -- when you include teacher strikes and unscheduled holidays -- it often numbers 160 days.
My opinion: If President Obama was searching for a theme for his Latin America policy, and for a concrete plan to take to the next Summit of the Americas to be held in Cartagena, Colombia, in April 2012, this is it. He should broaden his State of the Union address to include the whole hemisphere, and offer U.S. cooperation and know-how to improve education, science and technology standards across the region.
To grow steadily and reduce poverty at much faster rates, Latin America badly needs a ``Sputnik moment'' to wake it up from decades of complacency and declining education standards. Education, science, technology and innovation should not be just a U.S. obsession, but the new joint cause of the Americas.
Source: http://www.miamiherald.com
Thursday, January 27, 2011
Expo Pack México to contain Latin American innovation
Scheduled for June 21-24 at the Centro Banamex in Mexico City, Expo Pack México 2011 will showcase technologies in packaging and processing from more than 900 exhibitors from 20 countries.
"Each year, decision makers visit Expo Pack México and find innovations that address all aspects of their production lines, from processing through packaging," says José Martínez, director of the Latin America office of show producer PMMI. "I am confident that they'll once again find what they're looking for—and more."
PMMI expects more than 22,000 packaging and processing professionals from throughout Mexico and Latin America to attend from a range of industries, including food, beverage, pharmaceutical, personal care, graphic arts, medical, chemical, automotive and more. The consumer packaged goods firms (CPGs) they represent are looking for innovations and solutions to meet increasing consumer demand and address market trends that include lighter-weight packaging materials, and greater functionality and practicality.
These are trends CPGs all over the world are addressing, Martinez notes, and to help them achieve their show goals, Expo Pack México 2011 will introduce two new pavilions.
"The Procesa Pavilion will feature the latest developments in processing machinery and technology, and the Containers and Materials Pavilion will be a focal point for new efficiencies and branding concepts" Martinez says. "In Mexico and in Latin America, like the rest of the world, consumers demand constant innovation from CPGs, whether that means finding more environmentally-friendly packaging or learning new ways to enhance the consumer experience."
Mexican economy signals stability and growth
Mexico boasts the 11th largest population in the world. In addition, exports of manufactured goods from Mexico are on the rise.
"Economic predictions for Mexico in 2011 and beyond are signaling stability," Martínez says. "Mexican economists predict approximately 4 percent growth this year. They also say they expect inflation will be sustained and controlled at 3.8 percent for 2011 and 4.4 percent for the decade."
Mexico consistently ranks among the top 10 countries importing packaging machinery, bringing in approximately $500 million in machinery and parts annually.
"The peso is strong, and will remain strong throughout the year, so importing machinery remains a very good option for Mexican companies," adds Martinez.
Besides the economic growth, Mexico has the advantage of location making it easy for neighboring countries like Guatemala, El Salvador, Costa Rica and Honduras to visit the show and find solutions that fit their needs.
Source: http://www.packagingdigest.com
"Each year, decision makers visit Expo Pack México and find innovations that address all aspects of their production lines, from processing through packaging," says José Martínez, director of the Latin America office of show producer PMMI. "I am confident that they'll once again find what they're looking for—and more."
PMMI expects more than 22,000 packaging and processing professionals from throughout Mexico and Latin America to attend from a range of industries, including food, beverage, pharmaceutical, personal care, graphic arts, medical, chemical, automotive and more. The consumer packaged goods firms (CPGs) they represent are looking for innovations and solutions to meet increasing consumer demand and address market trends that include lighter-weight packaging materials, and greater functionality and practicality.
These are trends CPGs all over the world are addressing, Martinez notes, and to help them achieve their show goals, Expo Pack México 2011 will introduce two new pavilions.
"The Procesa Pavilion will feature the latest developments in processing machinery and technology, and the Containers and Materials Pavilion will be a focal point for new efficiencies and branding concepts" Martinez says. "In Mexico and in Latin America, like the rest of the world, consumers demand constant innovation from CPGs, whether that means finding more environmentally-friendly packaging or learning new ways to enhance the consumer experience."
Mexican economy signals stability and growth
Mexico boasts the 11th largest population in the world. In addition, exports of manufactured goods from Mexico are on the rise.
"Economic predictions for Mexico in 2011 and beyond are signaling stability," Martínez says. "Mexican economists predict approximately 4 percent growth this year. They also say they expect inflation will be sustained and controlled at 3.8 percent for 2011 and 4.4 percent for the decade."
Mexico consistently ranks among the top 10 countries importing packaging machinery, bringing in approximately $500 million in machinery and parts annually.
"The peso is strong, and will remain strong throughout the year, so importing machinery remains a very good option for Mexican companies," adds Martinez.
Besides the economic growth, Mexico has the advantage of location making it easy for neighboring countries like Guatemala, El Salvador, Costa Rica and Honduras to visit the show and find solutions that fit their needs.
Source: http://www.packagingdigest.com
Wednesday, January 26, 2011
Obama to Visit Latin America in March
U.S. President Barack Obama says in his State of the Union speech that he will travel to Latin America in March.
In his prepared remarks, President Obama says he will travel to Brazil, Chile and El Salvador to forge new alliances for progress in the Americas. Two years ago, Mr. Obama visited Trinidad and Tobago to attend the 34-nation summit of the Americas.
Last March, the president met with Salvadoran President Mauricio Funes in Washington, and pledged U.S. support for efforts to strengthen the economy of that Central American nation. Mr. Obama said the U.S. wants to be an equal partner with El Salvador and other countries in the region. For his part, the Salvadoran leader said he hopes Washington will be a strategic partner to counter the problems of drug trafficking and organized crime.
Separately, President Obama notes in his speech that the United States will pursue free trade agreements with Panama and Colombia, and will continue Asia-Pacific and global trade talks.
Earlier Tuesday, a top Republican in the U.S. House of Representatives said Congress should move quickly to approve the pending agreements with Colombia, Panama and South Korea.
Dave Camp, the new chairman of the House Ways and Means Committee, called for the deals to be approved in the next six months.
He said the deadline is being driven by the need to create jobs for American workers. He also urged President Obama to set a timeline during the State of the Union address for passing those deals .
The three agreements were signed in 2007 during the administration of President George W. Bush. The deals have been held up mostly because of Democratic lawmakers' concerns, including provisions in the South Korea deal affecting the U.S. auto industry, and labor rights complaints in Colombia.
The top Democrat on the Ways and Means committee, Sander Levin, expressed optimism that the agreements could be approved with some changes. In prepared remarks Tuesday, he said the pacts should not be considered all at the same time, but individually, based on their own merits.
Source: http://www.voanews.com
In his prepared remarks, President Obama says he will travel to Brazil, Chile and El Salvador to forge new alliances for progress in the Americas. Two years ago, Mr. Obama visited Trinidad and Tobago to attend the 34-nation summit of the Americas.
Last March, the president met with Salvadoran President Mauricio Funes in Washington, and pledged U.S. support for efforts to strengthen the economy of that Central American nation. Mr. Obama said the U.S. wants to be an equal partner with El Salvador and other countries in the region. For his part, the Salvadoran leader said he hopes Washington will be a strategic partner to counter the problems of drug trafficking and organized crime.
Separately, President Obama notes in his speech that the United States will pursue free trade agreements with Panama and Colombia, and will continue Asia-Pacific and global trade talks.
Earlier Tuesday, a top Republican in the U.S. House of Representatives said Congress should move quickly to approve the pending agreements with Colombia, Panama and South Korea.
Dave Camp, the new chairman of the House Ways and Means Committee, called for the deals to be approved in the next six months.
He said the deadline is being driven by the need to create jobs for American workers. He also urged President Obama to set a timeline during the State of the Union address for passing those deals .
The three agreements were signed in 2007 during the administration of President George W. Bush. The deals have been held up mostly because of Democratic lawmakers' concerns, including provisions in the South Korea deal affecting the U.S. auto industry, and labor rights complaints in Colombia.
The top Democrat on the Ways and Means committee, Sander Levin, expressed optimism that the agreements could be approved with some changes. In prepared remarks Tuesday, he said the pacts should not be considered all at the same time, but individually, based on their own merits.
Source: http://www.voanews.com
Tuesday, January 25, 2011
Colombia, Mexico Criticize Rich Countries On Monetary, Fiscal Policies
PARIS (Dow Jones)--Latin American countries Monday criticized rich countries' monetary and fiscal policies that hurt their economies through currency swings.
During a seminar held in Paris on Monday, the Colombian President Juan Manuel Santos criticized the loose monetary policy in rich countries.
"This policy of issuing money to get out of recession is reevaluating currencies in Colombia, Chile, Brazil and all the countries in Latin America," Santos said in a speech in Paris, where he attended a forum to discuss the economic situation.
The strong currencies in Latin America in turn hurt those countries' exporters, who lose competitiveness, he added.
The policy of interest rates close to zero and the massive cash pumping into the economy through a quantitative easing program is counterproductive, Santos added. "If we want to get France, Spain, the U.S. out of recession with dynamic exports, the best recipe is to put countries that imports those goods, not killing their growth capacity."
Santos mentioned the possibility to set up controls on capital inflows toward emerging countries as a possible solution to the currency appreciation.
Santos position is contradictory, Goldman Sachs Economist Alberto Ramos said. Latin American countries' economies are doing well so they are attracting investors and the flow of capitals make their currencies stronger, which is a good indicator. But on the other hand, Latin American countries need a swift recovery in the rich world to secure a demand for the goods they produce.
Quantitative easing is a good way for developed countries to keep their economies afloat. If growth in wealthy countries faltered, commodity prices would plummet and this wouldn't be the best thing for emerging markets.
During his speech, Santos said Latin American countries, which have known devastating crises in the past, can certainly teach lessons to some beleaguered developed countries who struggle under the weight of excessive debt and gaping budget deficits.
Mexican Finance Minister Ernesto Cordero, who also attended the forum in Paris, opposes capital controls. He suggested Latin American countries instead reduce their fiscal deficits so they can loosen their monetary policy, setting lower interest rates, and reduce the effects of carry-trade on their currencies.
The carry-trade is the investment strategy consisting of borrowing in a currency from a low-interest-rate country to invest the proceeds in a currency from a country with higher rates.
Cordero's ideas are more likely to have a positive effect than Santos's, Goldman Sachs's Ramos said.
Cordero, whose country will lead the Group of 20 industrial and developing countries in 2012, also said wealthy nations should focus on fiscal discipline.
As Mexico expects its deficit to reach the equivalent of a modest 0.5% of gross domestic product, excluding the investment program of its state-owned oil firm, its economy is likely to grow a decent 4% in 2011.
As Latin America weathers the financial crisis in a better position than Europe and the U.S., its leaders want more say in the world's financial debates. Santos asked France, who heads the G-20, to consult non-member countries such as his during this year's talks.
Source: http://online.wsj.com
During a seminar held in Paris on Monday, the Colombian President Juan Manuel Santos criticized the loose monetary policy in rich countries.
"This policy of issuing money to get out of recession is reevaluating currencies in Colombia, Chile, Brazil and all the countries in Latin America," Santos said in a speech in Paris, where he attended a forum to discuss the economic situation.
The strong currencies in Latin America in turn hurt those countries' exporters, who lose competitiveness, he added.
The policy of interest rates close to zero and the massive cash pumping into the economy through a quantitative easing program is counterproductive, Santos added. "If we want to get France, Spain, the U.S. out of recession with dynamic exports, the best recipe is to put countries that imports those goods, not killing their growth capacity."
Santos mentioned the possibility to set up controls on capital inflows toward emerging countries as a possible solution to the currency appreciation.
Santos position is contradictory, Goldman Sachs Economist Alberto Ramos said. Latin American countries' economies are doing well so they are attracting investors and the flow of capitals make their currencies stronger, which is a good indicator. But on the other hand, Latin American countries need a swift recovery in the rich world to secure a demand for the goods they produce.
Quantitative easing is a good way for developed countries to keep their economies afloat. If growth in wealthy countries faltered, commodity prices would plummet and this wouldn't be the best thing for emerging markets.
During his speech, Santos said Latin American countries, which have known devastating crises in the past, can certainly teach lessons to some beleaguered developed countries who struggle under the weight of excessive debt and gaping budget deficits.
Mexican Finance Minister Ernesto Cordero, who also attended the forum in Paris, opposes capital controls. He suggested Latin American countries instead reduce their fiscal deficits so they can loosen their monetary policy, setting lower interest rates, and reduce the effects of carry-trade on their currencies.
The carry-trade is the investment strategy consisting of borrowing in a currency from a low-interest-rate country to invest the proceeds in a currency from a country with higher rates.
Cordero's ideas are more likely to have a positive effect than Santos's, Goldman Sachs's Ramos said.
Cordero, whose country will lead the Group of 20 industrial and developing countries in 2012, also said wealthy nations should focus on fiscal discipline.
As Mexico expects its deficit to reach the equivalent of a modest 0.5% of gross domestic product, excluding the investment program of its state-owned oil firm, its economy is likely to grow a decent 4% in 2011.
As Latin America weathers the financial crisis in a better position than Europe and the U.S., its leaders want more say in the world's financial debates. Santos asked France, who heads the G-20, to consult non-member countries such as his during this year's talks.
Source: http://online.wsj.com
Monday, January 24, 2011
CNBC Davos 2011: Latin America Flexes Its Economic Muscle
After decades of boom to bust behavior, economies from Mexico to Brazil are looking dynamic, diverse and durable, helped by a wealth of natural resources and a good measure of fiscal discipline.
"Latin America is among the regions leading the economic recovery," says Mona Pearl, founder and COO of BeyondAStrategy, a global business development firm. "Latin America's economic performance is certain to improve even more."
"Latin America has been notorious for centuries as having a poor track record for sustaining economic growth," says Larry Harding, founder and president of High Street Partners, an international business service firm. "But things are different now. The area is blessed with commodities and natural resources that are in demand and a lot of the political instability of the past is gone. It's really an economic engine."
It's a big engine at that—some 600 million people and 36 countries—from Mexico to the Caribbean islands to the bottom of the continent and Chile.
Once thought of as under-developed and ignored, Latin America boasts huge reserves of raw materials like oil and minerals, growing industries as well as population, while attracting billions in investment money from China, Europe and the U.S.
And despite 2010 being a recovery year because of the global economic downturn, Latin America still ranks second among emerging markets behind Asian countries in terms of gross domestic product growth, GDP, and represents nearly 18 percent of the total GDP from all emerging markets.
"The interesting thing is that before the Great Recession, during and now after, emerging markets have been growing fast than mature markets," says Bob Gitter, department of economics chair at Ohio Wesleyan University. "That is true of Latin America."
Analysts like Gitter, point to several factors for Latin America's economic boom. The area is experiencing a huge increase in purchase power due to growing income among lower wage workers. It also has a relatively young and educated labor pool, say experts. And the region is experiencing high demand for its natural resources from China that's turning into jobs and consumer spending.
"People in Latin America are doing well for the most part and that shows up in the world economy," says Jorge Pinto, a professor at Pace University's Lubin School of Business. "People are consuming goods and becoming wealthier. They are interested in the latest electronics and technology. As a whole, Latin America is doing well."
Taken as a whole, Latin America appears monolithic. But experts say that appearance is deceiving.
"It's impossible to discuss Latin America as an economic or cultural bloc," says Phillip Guarino, president of Elementi Consulting, a global business management consulting firm in Boston, Massachusetts.
"There are big ethnic differences in areas like language with various dialects of Spanish and even food," Guarino goes on to say. "The northern countries, like Mexico and Central America feel more aligned with the U.S., while Argentina and the other southern countries considers themselves more European in culture and business."
"Latin America is really four areas," says Hernando Diaz-Candia, the managing partner in the Caracas, Venezuela office of Squire Sanders & Dempsey, a business and corporate law firm.
"You have Venezuela, Ecuador, Bolivia, Nicaragua, Cuba and Argentina having left wing politics," Diaz-Candia says. "Then it's Colombia, Chile, Peru, Panama and most of Central America that embrace neo-liberal economic policies of capitalism. Mexico stands alone as one bloc with its special relationship with the U.S. And the final piece is Brazil which because of its size and different language (Portuguese) and pragmatic approach to politics and economics, is unique among them all."
Those differences can be hard on businesses, says Mark Barnes, principal in charge of the U.S. High Growth Markets practice at KPMG, a tax and advisory firm.
"Conditions really vary from country to country as there are different challenges including corporate tax structures, compliance rules and regulations," Barnes adds. "A recent study from our firm showed that 52 percent of respondents cite complex and high taxation as a potential barrier to investment in Brazil."
Not all of Latin America should be equal in the eyes of investors, says Antonio Morales-Pita, assistant professor of international political economy at DePaul University.
"Economic soundness and political stability are the main conditions for a country to attract foreign investment," Morales-Pita explains. "As far as Latin America, it's Chile, Argentina, Costa Rica and Brazil as the best candidates for investment in the region. Those countries are showing good economic growth for the most part."
Morales-Pita adds Mexico, which has the second largest economy in Latin America, to the list of investment opportunities even in the midst of a drug war.
Mexico's economic funadmentals aren't as string as some of the others, but they're good enough, says Morales-Pita. "And it's unstable in terms of the increase in crime due to the drug cartels and doesn't look attractive to foreign investors, but I'd put in on the list of best candidates in the region."
"Clearly there are areas in Mexico where violence is a problem and you need to avoid those areas" says Ohio Wesleyan's Gitter." "But most of the country is safe and you see a lot of American companies doing business there like Starbucks, Ford and Wal-Mart, which is the largest retailer in Mexico. A recovery has taken place there even if the growth rate is below the rest of Latin America."
Still drawing major headlines of its own is Venezuela, as President Hugo Chavez continues to exert what some call a "hostility to private enterprise."
"The socialist movement in Venezuela, Bolivia and Ecuador provides great risk for investors," says Raul Vega, president and CEO of Auxis Inc, a management consulting firm based in south Florida.
"While there are opportunities to generate profits in these countries, they are offset by great economic and political uncertainty," Vega argues. "Many multi-national companies operating in Venezuela have seen their earnings negatively impacted by unexpected devaluations of the Bolivar and they've struggled to find methods to expatriate those earnings."
There are threats beyond Chavez that could sweep through the whole region, says Maria Pia Olivero, assistant professor at the LeBow College of Business at Drexel University.
"A drop in commodity prices would prove a major downside risk for all the region's economies," Olivero goes on to say. "Inflation is also a concern and if you look at it, capital inflows are increasingly speculative and fueling as asset prices and real estate bubble in many areas."
Olivero echoes words similar to former U.S. Fed Chairman Alan Greenspan about a past economic blow up.
"The current growth seems to be driven only by exuberance in consumption goods, not productivity," says Olivero. "Tighter fiscal policy to prevent overheating the Latin American economies may lie ahead."
While no one predicts endless growth for Latin America, for now at least, analysts see continued improvement in the region and the global economy.
"Latin America had a robust year in 2010 and while growth may be slower in 2011, regional performance will be positive," says KPMG's Barnes. "This makes the market attractive for investors and business in general."
"I always like to look at events, trends and then connect the dots," says Mona Pearl. "Since Brazil will host the World Cup in 2014 and the Olympics in 2016, this will have a huge economic impact on the whole region. The opportunities for benefiting from doing business in Latin America are endless."
Source: http://www.cnbc.com
"Latin America is among the regions leading the economic recovery," says Mona Pearl, founder and COO of BeyondAStrategy, a global business development firm. "Latin America's economic performance is certain to improve even more."
"Latin America has been notorious for centuries as having a poor track record for sustaining economic growth," says Larry Harding, founder and president of High Street Partners, an international business service firm. "But things are different now. The area is blessed with commodities and natural resources that are in demand and a lot of the political instability of the past is gone. It's really an economic engine."
It's a big engine at that—some 600 million people and 36 countries—from Mexico to the Caribbean islands to the bottom of the continent and Chile.
Once thought of as under-developed and ignored, Latin America boasts huge reserves of raw materials like oil and minerals, growing industries as well as population, while attracting billions in investment money from China, Europe and the U.S.
And despite 2010 being a recovery year because of the global economic downturn, Latin America still ranks second among emerging markets behind Asian countries in terms of gross domestic product growth, GDP, and represents nearly 18 percent of the total GDP from all emerging markets.
"The interesting thing is that before the Great Recession, during and now after, emerging markets have been growing fast than mature markets," says Bob Gitter, department of economics chair at Ohio Wesleyan University. "That is true of Latin America."
Analysts like Gitter, point to several factors for Latin America's economic boom. The area is experiencing a huge increase in purchase power due to growing income among lower wage workers. It also has a relatively young and educated labor pool, say experts. And the region is experiencing high demand for its natural resources from China that's turning into jobs and consumer spending.
"People in Latin America are doing well for the most part and that shows up in the world economy," says Jorge Pinto, a professor at Pace University's Lubin School of Business. "People are consuming goods and becoming wealthier. They are interested in the latest electronics and technology. As a whole, Latin America is doing well."
Taken as a whole, Latin America appears monolithic. But experts say that appearance is deceiving.
"It's impossible to discuss Latin America as an economic or cultural bloc," says Phillip Guarino, president of Elementi Consulting, a global business management consulting firm in Boston, Massachusetts.
"There are big ethnic differences in areas like language with various dialects of Spanish and even food," Guarino goes on to say. "The northern countries, like Mexico and Central America feel more aligned with the U.S., while Argentina and the other southern countries considers themselves more European in culture and business."
"Latin America is really four areas," says Hernando Diaz-Candia, the managing partner in the Caracas, Venezuela office of Squire Sanders & Dempsey, a business and corporate law firm.
"You have Venezuela, Ecuador, Bolivia, Nicaragua, Cuba and Argentina having left wing politics," Diaz-Candia says. "Then it's Colombia, Chile, Peru, Panama and most of Central America that embrace neo-liberal economic policies of capitalism. Mexico stands alone as one bloc with its special relationship with the U.S. And the final piece is Brazil which because of its size and different language (Portuguese) and pragmatic approach to politics and economics, is unique among them all."
Those differences can be hard on businesses, says Mark Barnes, principal in charge of the U.S. High Growth Markets practice at KPMG, a tax and advisory firm.
"Conditions really vary from country to country as there are different challenges including corporate tax structures, compliance rules and regulations," Barnes adds. "A recent study from our firm showed that 52 percent of respondents cite complex and high taxation as a potential barrier to investment in Brazil."
Not all of Latin America should be equal in the eyes of investors, says Antonio Morales-Pita, assistant professor of international political economy at DePaul University.
"Economic soundness and political stability are the main conditions for a country to attract foreign investment," Morales-Pita explains. "As far as Latin America, it's Chile, Argentina, Costa Rica and Brazil as the best candidates for investment in the region. Those countries are showing good economic growth for the most part."
Morales-Pita adds Mexico, which has the second largest economy in Latin America, to the list of investment opportunities even in the midst of a drug war.
Mexico's economic funadmentals aren't as string as some of the others, but they're good enough, says Morales-Pita. "And it's unstable in terms of the increase in crime due to the drug cartels and doesn't look attractive to foreign investors, but I'd put in on the list of best candidates in the region."
"Clearly there are areas in Mexico where violence is a problem and you need to avoid those areas" says Ohio Wesleyan's Gitter." "But most of the country is safe and you see a lot of American companies doing business there like Starbucks, Ford and Wal-Mart, which is the largest retailer in Mexico. A recovery has taken place there even if the growth rate is below the rest of Latin America."
Still drawing major headlines of its own is Venezuela, as President Hugo Chavez continues to exert what some call a "hostility to private enterprise."
"The socialist movement in Venezuela, Bolivia and Ecuador provides great risk for investors," says Raul Vega, president and CEO of Auxis Inc, a management consulting firm based in south Florida.
"While there are opportunities to generate profits in these countries, they are offset by great economic and political uncertainty," Vega argues. "Many multi-national companies operating in Venezuela have seen their earnings negatively impacted by unexpected devaluations of the Bolivar and they've struggled to find methods to expatriate those earnings."
There are threats beyond Chavez that could sweep through the whole region, says Maria Pia Olivero, assistant professor at the LeBow College of Business at Drexel University.
"A drop in commodity prices would prove a major downside risk for all the region's economies," Olivero goes on to say. "Inflation is also a concern and if you look at it, capital inflows are increasingly speculative and fueling as asset prices and real estate bubble in many areas."
Olivero echoes words similar to former U.S. Fed Chairman Alan Greenspan about a past economic blow up.
"The current growth seems to be driven only by exuberance in consumption goods, not productivity," says Olivero. "Tighter fiscal policy to prevent overheating the Latin American economies may lie ahead."
While no one predicts endless growth for Latin America, for now at least, analysts see continued improvement in the region and the global economy.
"Latin America had a robust year in 2010 and while growth may be slower in 2011, regional performance will be positive," says KPMG's Barnes. "This makes the market attractive for investors and business in general."
"I always like to look at events, trends and then connect the dots," says Mona Pearl. "Since Brazil will host the World Cup in 2014 and the Olympics in 2016, this will have a huge economic impact on the whole region. The opportunities for benefiting from doing business in Latin America are endless."
Source: http://www.cnbc.com
Friday, January 21, 2011
Moody's sees gains for LatAm, Caribbean ratings
NEW YORK (AP) — Moody's analysts expect to keep raising the sovereign debt ratings of Latin American and Caribbean countries in 2011.
The region's economies prospered in 2010 while developed nations lingered in recession or anemic recovery, the analysts wrote in a regional outlook report Thursday.
A total of 10 countries were upgraded in 2010, while three others were assigned positive outlooks. Moody's says the nations are likely to build on those gains because of strong domestic demand, rising commodity prices and the global economic recovery.
Within Latin America, South American countries are likely to grow more slowly, while their Central American and Caribbean neighbors expand and catch up, the report says. It says Latin American countries will be less vulnerable to market shocks because they are borrowing for longer periods and building up reserves of foreign currencies.
The main risk faced by the region comes from China, the report says. The region depends heavily on demand from the United States and China. Export demand could decline if the U.S. recovery is anemic or if China's growth slows.
In addition, some investors are skittish after the Eurozone debt crisis, which was sparked by sovereign debt ratings downgrades there.
Brazil is vulnerable to those factors, but is likely to remain growing faster than it has historically, the report says. It says Brazil's rating of "Baa3," with a positive outlook, will likely be reviewed in the second quarter of 2011.
The team of analysts was led by Moody's Vice President and Senior Analyst Patricio Esteruelas.
Source: http://www.bloomberg.com
The region's economies prospered in 2010 while developed nations lingered in recession or anemic recovery, the analysts wrote in a regional outlook report Thursday.
A total of 10 countries were upgraded in 2010, while three others were assigned positive outlooks. Moody's says the nations are likely to build on those gains because of strong domestic demand, rising commodity prices and the global economic recovery.
Within Latin America, South American countries are likely to grow more slowly, while their Central American and Caribbean neighbors expand and catch up, the report says. It says Latin American countries will be less vulnerable to market shocks because they are borrowing for longer periods and building up reserves of foreign currencies.
The main risk faced by the region comes from China, the report says. The region depends heavily on demand from the United States and China. Export demand could decline if the U.S. recovery is anemic or if China's growth slows.
In addition, some investors are skittish after the Eurozone debt crisis, which was sparked by sovereign debt ratings downgrades there.
Brazil is vulnerable to those factors, but is likely to remain growing faster than it has historically, the report says. It says Brazil's rating of "Baa3," with a positive outlook, will likely be reviewed in the second quarter of 2011.
The team of analysts was led by Moody's Vice President and Senior Analyst Patricio Esteruelas.
Source: http://www.bloomberg.com
Thursday, January 20, 2011
Aberdeen AM launches Latin American equity fund
Aberdeen Asset Management has launched a Latin American equity fund giving schemes the chance to gain exposure to economies such as Brazil, Chile and Mexico.
The vehicle – the Aberdeen Latin American Equity Fund – will be managed by the firm’s emerging markets team based in London and São Paulo.
Aberdeen’s head of global emerging markets Devan Kaloo said: “These uncertain times highlight the need to focus on companies with strong balance sheets, sound businesses and proven management.
“In this regard, the outlook for Latin America is compelling.
“Given that the region benefits from improved economic fundamentals, vast natural resources, a significant pool of consumers with favourable demographics, and financially strong companies, and should not be overlooked in a well-diversified global portfolio.”
Source: http://www.professionalpensions.com
The vehicle – the Aberdeen Latin American Equity Fund – will be managed by the firm’s emerging markets team based in London and São Paulo.
Aberdeen’s head of global emerging markets Devan Kaloo said: “These uncertain times highlight the need to focus on companies with strong balance sheets, sound businesses and proven management.
“In this regard, the outlook for Latin America is compelling.
“Given that the region benefits from improved economic fundamentals, vast natural resources, a significant pool of consumers with favourable demographics, and financially strong companies, and should not be overlooked in a well-diversified global portfolio.”
Source: http://www.professionalpensions.com
Wednesday, January 19, 2011
Mexico's Compartamos Likely To Look South For Expansion
MEXICO CITY (Dow Jones)--Mexican microfinance company Compartamos SAB (COMPARC.MX) will likely look south to Latin America as its seeks to expand operations abroad, a company official said Wednesday.
Carlos Danel, executive vice president of Compartamos, said at a press conference at the stock exchange that the company's medium and long-term plans include looking for partners or acquisitions in markets similar to that of Mexico, particularly other Latin American countries. The Central American market resembles certain southern states of Mexico, such as Chiapas, Oaxaca, and Veracruz, he said.
Banco Compartamos recently swapped its shares for shares in newly listed holding company Compartamos SAB with the aim of giving the company greater flexibility as it pursues expansion both in Mexico and abroad. The company is in the process of delisting the Banco Compartamos shares, which could take about three months.
Compartamos has nothing specific in the way of acquisitions or partnerships at present. "We're in the evaluation phase," Danel said. adding that financing for expansion could be via new capital, debt, or a combination.
Compartamos chairman Alvaro Rodriguez noted that the bank has a capitalization level above 40%. "With that capital structure, we have many [financing] options," he said.
Compartamos is Mexico's largest microfinance bank. It had 1.75 million customers and a loan portfolio of 8.78 billion pesos ($728 million) at the end of September 2010. The bank specializes in small working-capital loans, averaging around MXN5,000, to people who have little or no access to traditional bank credit. It also grants home improvement loans, and offers life insurance policies.
Compartamos shares recently traded at MXN21.98, up 0.5% from the previous close but down 17% from their launch on Dec. 24.
Source: http://online.wsj.com
Carlos Danel, executive vice president of Compartamos, said at a press conference at the stock exchange that the company's medium and long-term plans include looking for partners or acquisitions in markets similar to that of Mexico, particularly other Latin American countries. The Central American market resembles certain southern states of Mexico, such as Chiapas, Oaxaca, and Veracruz, he said.
Banco Compartamos recently swapped its shares for shares in newly listed holding company Compartamos SAB with the aim of giving the company greater flexibility as it pursues expansion both in Mexico and abroad. The company is in the process of delisting the Banco Compartamos shares, which could take about three months.
Compartamos has nothing specific in the way of acquisitions or partnerships at present. "We're in the evaluation phase," Danel said. adding that financing for expansion could be via new capital, debt, or a combination.
Compartamos chairman Alvaro Rodriguez noted that the bank has a capitalization level above 40%. "With that capital structure, we have many [financing] options," he said.
Compartamos is Mexico's largest microfinance bank. It had 1.75 million customers and a loan portfolio of 8.78 billion pesos ($728 million) at the end of September 2010. The bank specializes in small working-capital loans, averaging around MXN5,000, to people who have little or no access to traditional bank credit. It also grants home improvement loans, and offers life insurance policies.
Compartamos shares recently traded at MXN21.98, up 0.5% from the previous close but down 17% from their launch on Dec. 24.
Source: http://online.wsj.com
Tuesday, January 18, 2011
Mapfre report highlights market growth in Latin America
Insurance markets in Latin America experienced a 10.5% rise in premium volumes in 2009 compared to the preceding year – reaching €76 591m.
According to ‘The 9th Edition of the Latin America insurance market report', published by Mapfre, the depreciation of some local currencies, such as the Mexican Peso, against the Euro, has not favoured the translation into Euros of revenues from premiums in the region, which would have recorded a 14.2% rise compared to previous year should they have been expressed in local currency.
All the markets except for Mexico, experienced nominal increases in their premium volumes in Euros in 2009, according to the report. The countries that experienced a greater growth in Euros during that period were Venezuela (41.7%), Paraguay (26.1%), Peru (23.3%), Panama (15.2%) and Uruguay (14.9%). Likewise, the study reflects that the eight largest insurance markets in the region accumulated 95.1% of premiums and the three largest markets 65.6%. Brazil, with a 36.4% share, is still the largest market in the region, clearly exceeding the revenues from premiums of the two following countries in the ranking, Mexico and Venezuela.
Source: http://www.postonline.co.uk
According to ‘The 9th Edition of the Latin America insurance market report', published by Mapfre, the depreciation of some local currencies, such as the Mexican Peso, against the Euro, has not favoured the translation into Euros of revenues from premiums in the region, which would have recorded a 14.2% rise compared to previous year should they have been expressed in local currency.
All the markets except for Mexico, experienced nominal increases in their premium volumes in Euros in 2009, according to the report. The countries that experienced a greater growth in Euros during that period were Venezuela (41.7%), Paraguay (26.1%), Peru (23.3%), Panama (15.2%) and Uruguay (14.9%). Likewise, the study reflects that the eight largest insurance markets in the region accumulated 95.1% of premiums and the three largest markets 65.6%. Brazil, with a 36.4% share, is still the largest market in the region, clearly exceeding the revenues from premiums of the two following countries in the ranking, Mexico and Venezuela.
Source: http://www.postonline.co.uk
Monday, January 17, 2011
World Bank - Chile To Lead Latin America Growth This Year
SANTIAGO DE CHILE, Jan 17 (BERNAMA-NNN-MERCOPRESS) - The World Bank's 2011 Global Economic Prospects (GEP) report predicts that Chile will be the fastest-growing economy in Latin America and the Caribbean while the latter's growth slows down.
The report predicts a 5.8 percent growth rate for Chile's economy this year, a figure even higher than the one recorded through the 2004-2007 economic boom. High expectations are based primarily on the nation's recovery since the Feb 27 earthquake, the Santiago Times reported.
According to the report, Chile's growth "is slightly quicker, due to the strong rebuilding activity after the Feb. 27 earthquake.
Even though the sustained diversification of exports and the strong demand from Asia will be the basis for export growth, imports will kick off once rebuilding starts." "About half of the total exports come from the copper mining industry, which was not touched by the earthquake," GEP report said.
The Latin America and Caribbean region is expected to slow down with regard to economic growth. While last year regional growth reached 5.7 percent, the GEP predicts a lower 4 percent growth this year.
The slower growth is attributed to "the weakening of the [economic] environment," the report says, regarding the recent worldwide economic crisis. Yet Latin America's growth is still regarded as positive "compared to the region's past and other emergent economies' recovery [from the crisis]." The GEP predicts Chile's economic growth rates to be followed closely by Peru (5.5 percent) and Argentina (4.7 percent). The lowest performing country will be Venezuela, with an "extremely unsatisfying" 0.9 percent growth expected for this year.
On the world scale, the report predicts a global growth of 3.3 percent, slower than last year's rate of 3.9 percent. Even so, the general outlook is optimistic, as nations will seek to recover from the economic crisis and stabilise through the year 2012.
Source: http://www.bernama.com.my
The report predicts a 5.8 percent growth rate for Chile's economy this year, a figure even higher than the one recorded through the 2004-2007 economic boom. High expectations are based primarily on the nation's recovery since the Feb 27 earthquake, the Santiago Times reported.
According to the report, Chile's growth "is slightly quicker, due to the strong rebuilding activity after the Feb. 27 earthquake.
Even though the sustained diversification of exports and the strong demand from Asia will be the basis for export growth, imports will kick off once rebuilding starts." "About half of the total exports come from the copper mining industry, which was not touched by the earthquake," GEP report said.
The Latin America and Caribbean region is expected to slow down with regard to economic growth. While last year regional growth reached 5.7 percent, the GEP predicts a lower 4 percent growth this year.
The slower growth is attributed to "the weakening of the [economic] environment," the report says, regarding the recent worldwide economic crisis. Yet Latin America's growth is still regarded as positive "compared to the region's past and other emergent economies' recovery [from the crisis]." The GEP predicts Chile's economic growth rates to be followed closely by Peru (5.5 percent) and Argentina (4.7 percent). The lowest performing country will be Venezuela, with an "extremely unsatisfying" 0.9 percent growth expected for this year.
On the world scale, the report predicts a global growth of 3.3 percent, slower than last year's rate of 3.9 percent. Even so, the general outlook is optimistic, as nations will seek to recover from the economic crisis and stabilise through the year 2012.
Source: http://www.bernama.com.my
Friday, January 14, 2011
Caribbean, Latin America News In Brief
CaribWorldNews, NEW YORK, NY, Fri. Jan. 14, 2011: The economy of the Latin America and the Caribbean region is set to expand further in 2011.
That`s the word from the World Bank. Growth is forecast to slow somewhat to around 4 percent in 2011 and 2012, largely because of a weaker external environment as growth in advanced economies and China moderates, bank analysts said.
This as several countries in the region have been subject to potentially destabilizing capital inflows that have contributed to strong upward pressure on some currencies.
The bank, in its Global Economic Prospects 2011 report this week, however, insisted that the region has emerged well from the global crisis compared with its own past performance and the pace of recovery in other regions.
`After contracting by 2.2 percent in 2009, GDP is estimated to have expanded 5.7 percent in 2010, similar to the average growth recorded during the 2004-2007 boom years,` the Bank said in a statement this week.
For the region`s largest economy, Brazil, the bank expects gross domestic product to expand 4.4 percent in 2011 on top of an estimated 7.6 percent growth in 2010. Mexico, which suffered the most from the U.S. recession, is likely to see growth slow to 3.6 percent from an estimated 5.2 percent in 2010, according to the World Bank.
JAMAICA OPENS IAN FLEMING AIRPORT
Jamaica`s newest airport, the Ian Fleming Airport, is open for business. Prime Minister Bruce Golding opened the transformed Boscobel Aerodrome that has been re-named after the British writer and creator of the world`s most famous fictional spy, James Bond, in St. Mary.
Officials said the upgraded airport will handle small jets and international arrivals to attract the high end of the tourist market.
Golding explained that the airport was renamed in memory of Fleming, since he gave Jamaica an image much larger than it would otherwise have had as this was the place where the creativity emerged that enabled him to write 13 James Bond novels.
`We also considered that the market to which we are appealing is a market to which the name Ian Fleming would have some resonance. We genuinely wanted to honor the memory of Ian Fleming because of all that he has achieved and the extent to which he brought Jamaica into that achievement.... and we wanted to take advantage of his celebrity status,` he added.
IMF Funds For St. Lucia
The Executive Board of the International Monetary Fund this week approved a combined about US$8.19 million in emergency assistance for St. Lucia to cope with the economic consequences of Hurricane Tomas.
The financial assistance consists of about US$5.85 million disbursement under the IMF`s Rapid Credit Facility and about US$2.34 million under the Fund`s Emergency Natural Disaster Assistance (ENDA).
Hurricane Tomas struck St. Lucia on October 30, 2010 causing loss of life and significant damage to the nation`s road network, water supply, and agriculture sector. The latest but still preliminary estimates suggest that total damages amount to US$336 million, or about 34 percent of GDP.
Haiti Industrial Park
Some 20,000 Haitians could be employed in northern Haiti soon under an agreement to build an industrial park.
Authorities of the Haitian government and the U.S. State Department and executives of the Inter-American Development Bank and the Korean textile manufacturer Sae-A Trading Co. Ltd. signed a framework agreement this week.
Through grants made to Haiti, the IDB will support the construction of the industrial park`s buildings, internal roads, electricity and water distribution networks and water treatment plant. The U.S. government will underwrite the construction of a power generating facility to supply the park and its surrounding area, as well as a housing program for the industrial park`s workers.
The industrial park will serve as a location for manufacturers from around the world looking to leverage the unique trade preferences the United States has granted Haiti. Sae-A, a major supplier to U.S. retailers such as Wal-Mart, Target, Gap and Levi`s, plans to hire as many as 20,000 workers over time, becoming the largest private sector employer in Haiti.
Source: http://www.caribbeanworldnews.com
That`s the word from the World Bank. Growth is forecast to slow somewhat to around 4 percent in 2011 and 2012, largely because of a weaker external environment as growth in advanced economies and China moderates, bank analysts said.
This as several countries in the region have been subject to potentially destabilizing capital inflows that have contributed to strong upward pressure on some currencies.
The bank, in its Global Economic Prospects 2011 report this week, however, insisted that the region has emerged well from the global crisis compared with its own past performance and the pace of recovery in other regions.
`After contracting by 2.2 percent in 2009, GDP is estimated to have expanded 5.7 percent in 2010, similar to the average growth recorded during the 2004-2007 boom years,` the Bank said in a statement this week.
For the region`s largest economy, Brazil, the bank expects gross domestic product to expand 4.4 percent in 2011 on top of an estimated 7.6 percent growth in 2010. Mexico, which suffered the most from the U.S. recession, is likely to see growth slow to 3.6 percent from an estimated 5.2 percent in 2010, according to the World Bank.
JAMAICA OPENS IAN FLEMING AIRPORT
Jamaica`s newest airport, the Ian Fleming Airport, is open for business. Prime Minister Bruce Golding opened the transformed Boscobel Aerodrome that has been re-named after the British writer and creator of the world`s most famous fictional spy, James Bond, in St. Mary.
Officials said the upgraded airport will handle small jets and international arrivals to attract the high end of the tourist market.
Golding explained that the airport was renamed in memory of Fleming, since he gave Jamaica an image much larger than it would otherwise have had as this was the place where the creativity emerged that enabled him to write 13 James Bond novels.
`We also considered that the market to which we are appealing is a market to which the name Ian Fleming would have some resonance. We genuinely wanted to honor the memory of Ian Fleming because of all that he has achieved and the extent to which he brought Jamaica into that achievement.... and we wanted to take advantage of his celebrity status,` he added.
IMF Funds For St. Lucia
The Executive Board of the International Monetary Fund this week approved a combined about US$8.19 million in emergency assistance for St. Lucia to cope with the economic consequences of Hurricane Tomas.
The financial assistance consists of about US$5.85 million disbursement under the IMF`s Rapid Credit Facility and about US$2.34 million under the Fund`s Emergency Natural Disaster Assistance (ENDA).
Hurricane Tomas struck St. Lucia on October 30, 2010 causing loss of life and significant damage to the nation`s road network, water supply, and agriculture sector. The latest but still preliminary estimates suggest that total damages amount to US$336 million, or about 34 percent of GDP.
Haiti Industrial Park
Some 20,000 Haitians could be employed in northern Haiti soon under an agreement to build an industrial park.
Authorities of the Haitian government and the U.S. State Department and executives of the Inter-American Development Bank and the Korean textile manufacturer Sae-A Trading Co. Ltd. signed a framework agreement this week.
Through grants made to Haiti, the IDB will support the construction of the industrial park`s buildings, internal roads, electricity and water distribution networks and water treatment plant. The U.S. government will underwrite the construction of a power generating facility to supply the park and its surrounding area, as well as a housing program for the industrial park`s workers.
The industrial park will serve as a location for manufacturers from around the world looking to leverage the unique trade preferences the United States has granted Haiti. Sae-A, a major supplier to U.S. retailers such as Wal-Mart, Target, Gap and Levi`s, plans to hire as many as 20,000 workers over time, becoming the largest private sector employer in Haiti.
Source: http://www.caribbeanworldnews.com
Thursday, January 13, 2011
World Bank Sees Healthy, But Slowing Growth For Latin America
MEXICO CITY (Dow Jones)--The World Bank sees the economies of Latin America and the Caribbean expanding further in 2011, but at a slower pace than the previous year given expectations of a deceleration in advanced economies and China.
In its report on global economic prospects, the World Bank estimated that the region as a whole will increase output by around 4% this year, following an estimated 5.7% growth in 2010.
For the region's largest economy, Brazil, the bank expects gross domestic product to expand 4.4% in 2011 on top of an estimated 7.6% growth in 2010. An increasing workforce, real wage growth and credit expansion should support output, the bank said. Renewed global capital market volatility presents some difficulties for policy makers as they grapple with inflation pressures at the same time that yield-chasing capital inflows prompt the real to appreciate, threatening export competitiveness.
Mexico, which suffered the most from the U.S. recession given its close trade and investment ties, and has yet to fully recover, is likely to see growth slow to 3.6% from an estimated 5.2% in 2010, according to the World Bank.
The bank also sees economic slowdowns for Argentina and Peru, with growth estimates of 4.7% and 5.5%, respectively, for 2011, while gross domestic product is seen accelerating modestly in Chile and Colombia to 5.8% and 4.4%.
The World Bank expects Venezuela's economy to grow a modest 0.9% this year, describing that country's outlook as "extremely dissatisfactory" considering the recovery in commodities prices and regional activity. The Venezuelan central bank reported a 1.9% contraction for 2010.
The World Bank was critical of the government of President Hugo Chavez, which has been nationalizing key industries, tightening control on the financial sector, and spending heavily.
Government policy in Venezuela is "creating severe economic distortions," the bank said. "Despite devaluation and higher oil prices which have boosted the government's revenues, current levels of spending are not sustainable and will only aggravate economic dislocations, hence failing to produce a sustainable recovery."
Risks in the region overall include robust capital inflows and their impact on exchange rates, export competitiveness and domestic asset prices. A sharper-than-expected slowdown in global growth could rapidly unwind gains in commodity export revenue and domestic income.
Mexico, with its close links to the U.S., and the Caribbean countries, which depend heavily on remittances and tourism, would be particularly vulnerable to a worse-than-expected U.S. economic performance, the World Bank said.
Fallout in the region from Europe's sovereign-debt troubles could include an impact on foreign direct investment if the situation in Spain and Portugal deteriorated, given their close ties to Latin America.
Although so far, banks in those countries have increased their business in Latin America, if they were required to restructure or deleverage they could call on assets of healthy regional subsidiaries, the World Bank said. On the other hand, under a less-severe scenario, "Latin America could benefit if it is seen as a more secure location for investing," it added.
"Capital shortages are unlikely to materialize in the case of Latin America and its linkages to the Spanish banking system, in part because most of these banks operate as subsidiaries and are subject to independent capital and regulatory requirements in the host country," the World Bank said. "Indeed, the main Spanish banks are increasingly reliant on earnings from their Latin American operations, and several have expanded their developing-world holdings in 2010."
Source: http://online.wsj.com
In its report on global economic prospects, the World Bank estimated that the region as a whole will increase output by around 4% this year, following an estimated 5.7% growth in 2010.
For the region's largest economy, Brazil, the bank expects gross domestic product to expand 4.4% in 2011 on top of an estimated 7.6% growth in 2010. An increasing workforce, real wage growth and credit expansion should support output, the bank said. Renewed global capital market volatility presents some difficulties for policy makers as they grapple with inflation pressures at the same time that yield-chasing capital inflows prompt the real to appreciate, threatening export competitiveness.
Mexico, which suffered the most from the U.S. recession given its close trade and investment ties, and has yet to fully recover, is likely to see growth slow to 3.6% from an estimated 5.2% in 2010, according to the World Bank.
The bank also sees economic slowdowns for Argentina and Peru, with growth estimates of 4.7% and 5.5%, respectively, for 2011, while gross domestic product is seen accelerating modestly in Chile and Colombia to 5.8% and 4.4%.
The World Bank expects Venezuela's economy to grow a modest 0.9% this year, describing that country's outlook as "extremely dissatisfactory" considering the recovery in commodities prices and regional activity. The Venezuelan central bank reported a 1.9% contraction for 2010.
The World Bank was critical of the government of President Hugo Chavez, which has been nationalizing key industries, tightening control on the financial sector, and spending heavily.
Government policy in Venezuela is "creating severe economic distortions," the bank said. "Despite devaluation and higher oil prices which have boosted the government's revenues, current levels of spending are not sustainable and will only aggravate economic dislocations, hence failing to produce a sustainable recovery."
Risks in the region overall include robust capital inflows and their impact on exchange rates, export competitiveness and domestic asset prices. A sharper-than-expected slowdown in global growth could rapidly unwind gains in commodity export revenue and domestic income.
Mexico, with its close links to the U.S., and the Caribbean countries, which depend heavily on remittances and tourism, would be particularly vulnerable to a worse-than-expected U.S. economic performance, the World Bank said.
Fallout in the region from Europe's sovereign-debt troubles could include an impact on foreign direct investment if the situation in Spain and Portugal deteriorated, given their close ties to Latin America.
Although so far, banks in those countries have increased their business in Latin America, if they were required to restructure or deleverage they could call on assets of healthy regional subsidiaries, the World Bank said. On the other hand, under a less-severe scenario, "Latin America could benefit if it is seen as a more secure location for investing," it added.
"Capital shortages are unlikely to materialize in the case of Latin America and its linkages to the Spanish banking system, in part because most of these banks operate as subsidiaries and are subject to independent capital and regulatory requirements in the host country," the World Bank said. "Indeed, the main Spanish banks are increasingly reliant on earnings from their Latin American operations, and several have expanded their developing-world holdings in 2010."
Source: http://online.wsj.com
Wednesday, January 12, 2011
Aberdeen launches Latin American fund
Devan Kaloo will take charge of a new Aberdeen Asset Management fund that focusing on Latin American equities.
At the end of this week the asset manager will unveil a UK-domiciled version of Aberdeen’s Global Latin America fund, which is domiciled in Luxembourg.
Over three years it has narrowly under performed its benchmark, generating 4.28% versus 4.42% by its benchmark. But Aberdeen believes that the investment case for Latin America remains a compelling one, given the improved fundamentals and prospects for growth in the region.
‘These uncertain times highlight the need to focus on companies with strong balance sheets, sound businesses and proven management,’ Aberdeen’s head of global emerging markets Kaloo (pictured) said.
'In this regard, the outlook for Latin America is compelling. Given that the region benefits from improved economic fundamentals, vast natural resources, a significant pool of consumers with favourable demographics, and financially strong companies, [it] should not be overlooked in a well-diversified global portfolio.'
Aberdeen's emerging market team will use its bottom-up approach to pick equities exposed to Latin America. 'we aim to identify those Latin American companies that meet our strict quality criteria, are attractively valued and offer the prospect for long-term share price and dividend growth,’ Kaloo said.
Source: Citywire
www.citywire.co.uk
At the end of this week the asset manager will unveil a UK-domiciled version of Aberdeen’s Global Latin America fund, which is domiciled in Luxembourg.
Over three years it has narrowly under performed its benchmark, generating 4.28% versus 4.42% by its benchmark. But Aberdeen believes that the investment case for Latin America remains a compelling one, given the improved fundamentals and prospects for growth in the region.
‘These uncertain times highlight the need to focus on companies with strong balance sheets, sound businesses and proven management,’ Aberdeen’s head of global emerging markets Kaloo (pictured) said.
'In this regard, the outlook for Latin America is compelling. Given that the region benefits from improved economic fundamentals, vast natural resources, a significant pool of consumers with favourable demographics, and financially strong companies, [it] should not be overlooked in a well-diversified global portfolio.'
Aberdeen's emerging market team will use its bottom-up approach to pick equities exposed to Latin America. 'we aim to identify those Latin American companies that meet our strict quality criteria, are attractively valued and offer the prospect for long-term share price and dividend growth,’ Kaloo said.
Source: Citywire
www.citywire.co.uk
Tuesday, January 11, 2011
Currency Wars Are Heating Up Across Latin America
Emerging-market countries are gearing up for what could be a potentially damaging round of currency interventions to help keep their economies competitive with other nations, especially China.
"Many countries are increasing the amount of capital controls and direct intervention in order to temper currency inflows and reduce the effect of these flows on currency appreciation," says Mauro Roca, emerging markets currency strategist at Deutsche Bank.
Brazilian Finance Minister Guido Mantega told the Financial Times that his country was preparing additional measures to prevent a further climb in the value of the Brazilian real. He said his government was planning to complain to the World Trade Organization about currency manipulation, naming China and the U.S. as the worst offenders.
"This is a currency war that is turning into a trade war," Mantega said.
Slowing Down the Flow of Capital
Latin America has seen a flurry of recent currency interventions, as neighbors protect themselves against controls being imposed by the countries next door. Chile, for example, announced last week that its central bank would buy $12 billion worth of U.S. currency to keep the Chilean peso from rising further, starting at $50 million a day.
Brazil has already imposed increased taxes on fixed-income investments in the real, to reduce the attractiveness of those inflows. The tax is now at 6%. In Peru, the government is taking an indirect approach, adjusting the reserve requirements for banks to slow the inflow of dollars. Argentina, by contrast, has a totally managed local currency whose exchange rate is set by the central bank.
"If one country takes measures, it make sit easier for other to follow," Roca says.
Some emerging-market countries blame the U.S. Federal Reserve for the problem, saying its program of quantitative easing -- buying $600 billion of Treasury bonds to keep interest rates low and increase liquidity -- is forcing investors to flee the dollar and invest elsewhere. Federal Reserve Chairman Ben Bernanke has been lambasted by the Russians and South Koreans for causing their currencies to appreciate.
Since the Chinese yuan is closely linked to the dollar, when the dollar declines, so does the Chinese currency. This hurts manufacturers in other emerging-market countries that compete with China but where domestic currencies are rising.
Emerging Market Currencies Remain Attractive
But so far, quantitative easing hasn't worked as planned. Interest rates are actually rising sharply in the U.S., and so is the dollar against other major currencies like the euro.
What seems to be happening, according to Roca, is that emerging economies like Brazil have interest rates that are so much higher than those in the developed world that investors, particularly those from Japan, where interest rate are near zero, can make a substantial profit even after paying Brazil's punitive tax.
In addition, Brazil and other developing countries have much higher growth rates than the U.S. and Europe, so the prospect of capital gains on assets is much higher.
"We have very low rates in the developed world, and funds are searching for yield," Roca says. "In most of the emerging market countries, there are good macroeconomic frameworks in terms of fiscal and monetary policies." (Fiscal policy refers to state budgets, while monetary policy applies to interest rates.)
The only nation in the Latin American region so far not to impose currency controls is Mexico, and money has been pouring into the Mexican peso lately.
Source: www.dailyfinance.com
"Many countries are increasing the amount of capital controls and direct intervention in order to temper currency inflows and reduce the effect of these flows on currency appreciation," says Mauro Roca, emerging markets currency strategist at Deutsche Bank.
Brazilian Finance Minister Guido Mantega told the Financial Times that his country was preparing additional measures to prevent a further climb in the value of the Brazilian real. He said his government was planning to complain to the World Trade Organization about currency manipulation, naming China and the U.S. as the worst offenders.
"This is a currency war that is turning into a trade war," Mantega said.
Slowing Down the Flow of Capital
Latin America has seen a flurry of recent currency interventions, as neighbors protect themselves against controls being imposed by the countries next door. Chile, for example, announced last week that its central bank would buy $12 billion worth of U.S. currency to keep the Chilean peso from rising further, starting at $50 million a day.
Brazil has already imposed increased taxes on fixed-income investments in the real, to reduce the attractiveness of those inflows. The tax is now at 6%. In Peru, the government is taking an indirect approach, adjusting the reserve requirements for banks to slow the inflow of dollars. Argentina, by contrast, has a totally managed local currency whose exchange rate is set by the central bank.
"If one country takes measures, it make sit easier for other to follow," Roca says.
Some emerging-market countries blame the U.S. Federal Reserve for the problem, saying its program of quantitative easing -- buying $600 billion of Treasury bonds to keep interest rates low and increase liquidity -- is forcing investors to flee the dollar and invest elsewhere. Federal Reserve Chairman Ben Bernanke has been lambasted by the Russians and South Koreans for causing their currencies to appreciate.
Since the Chinese yuan is closely linked to the dollar, when the dollar declines, so does the Chinese currency. This hurts manufacturers in other emerging-market countries that compete with China but where domestic currencies are rising.
Emerging Market Currencies Remain Attractive
But so far, quantitative easing hasn't worked as planned. Interest rates are actually rising sharply in the U.S., and so is the dollar against other major currencies like the euro.
What seems to be happening, according to Roca, is that emerging economies like Brazil have interest rates that are so much higher than those in the developed world that investors, particularly those from Japan, where interest rate are near zero, can make a substantial profit even after paying Brazil's punitive tax.
In addition, Brazil and other developing countries have much higher growth rates than the U.S. and Europe, so the prospect of capital gains on assets is much higher.
"We have very low rates in the developed world, and funds are searching for yield," Roca says. "In most of the emerging market countries, there are good macroeconomic frameworks in terms of fiscal and monetary policies." (Fiscal policy refers to state budgets, while monetary policy applies to interest rates.)
The only nation in the Latin American region so far not to impose currency controls is Mexico, and money has been pouring into the Mexican peso lately.
Source: www.dailyfinance.com
Monday, January 10, 2011
Brazil marches on to global greatness – and that is its biggest problem
TAVIA GRANT
All new governments grapple with tough decisions. Few face tougher ones than Brazil.
Inflation in Latin America's largest economy is running at a six-year high, with food prices rocketing 10 per cent last year. With memories of painful hyperinflation in prior decades, new President Dilma Rousseff vowed that she wouldn’t allow “this plague [to] return to corrode our economic fabric and punish the poorest families.”
The most logical move for Brazil’s inflation-targeting central bank would be to boost interest rates this month. But Brazil’s rates are already among the world’s highest, at a choking 10.75 per cent. Raising them further would not only squeeze borrowers – it could give foreign investors yet another reason to buy its currency, the real.
The real has soared almost 35 per cent since the beginning of 2009, damaging the ability of the country’s exporters to compete. Ms. Rousseff has pledged to protect Brazil from “the indiscriminate flow of speculative capital.” But the surge is enough that Goldman Sachs recently dubbed it the world’s most overvalued currency.
Brazil's predicament illustrates one of the chief threats to growth as economies in South America and Asia remain hot. And the country is far from alone in grappling with a flood of new money: Investment dollars are pouring into many emerging markets, inflation is a growing problem and so too are their galloping currencies. Chile, Peru and Mexico are all publicly fretting over the currency conundrum.
The choices the government and its central bank make matter well beyond Brazil's borders. The country is rapidly becoming a powerhouse in the region and the world. By 2032, Brazil’s economy will overtake Germany's in size, PricewaterhouseCoopers predicted last week.
“It is a very challenging, difficult scenario,” says André Perfeito, chief economist at Gradual Investimentos in Sao Paulo. “As economists in Brazil, we are very curious about how the central bank will react – to face the inflation challenge, or watch the exchange rate.”
The real's rapid appreciation is such that middle-class Brazilian families are flying to Miami or New York to buy cheaper clothes, laptops and shoes, Mr. Perfeito said as an illustration of how “wrong our foreign exchange rate is now.”
Last week, Brazil's central bank took more steps to curb the currency’s appreciation by raising the reserve requirements on foreign exchange positions. Strategists say the move – the third intervention in recent months – will do little to dent the currency’s long-term appeal because Brazil’s fundamentals are so good.
Brazil’s economy grew an estimated 7.5 per cent last year and is forecast to expand 5 per cent this year thanks to rich oil reserves and a growing middle class.
The most sensible route, economists say, would be to cut government spending. That, too, is riddled with challenges. Brazil has to boost spending on infrastructure, like roads and airports, as it prepares to host the 2014 World Cup of Soccer and the 2016 Olympic Games. The country is also lagging in education and housing investments, and badly needs to ramp up in both to raise living standards and compete on the world stage.
Ms. Rousseff's new government faces a “policy quagmire. But it's a position of strength, similar to China,” said John Price, Miami-based managing director of business intelligence on Latin America at Kroll Inc. Massive infrastructure projects are looming, and he says a key risk will be ensuring funds are spent efficiently.
Protectionism is another risk. Brazil recently raised tariffs on toy imports, such as dolls and tricycles, from China to try to help its flailing manufacturers.
The buoyant economy is a credit to outgoing president Luiz Inacio Lula da Silva, a former shoeshine boy who is leaving office with a record approval rating. Under his tenure, 21 million Brazilians moved out of poverty, with 15 million new jobs created since 2003.
With successes came a flood of foreign interest. The real doubled in value in Mr. Lula's eight-year presidency as investors piled in. Last year, amid mounting concern over the soaring currency, Brazil became the first country to highlight the danger of “currency wars.”
Last week, the country's new government made it clear that those wars are still waging. “We're not going to allow our American friends to melt the dollar,” Brazil's Finance Minister Guido Mantega said of U.S. plans to inject $600-billion into its economy.
Even free-market Chile is getting involved in those wars, last week announcing that it is buying U.S. dollars to weaken the peso.
Two factors could help the country weather its challenges, Mr. Perfeito says. One may enfold on its own – the U.S. dollar could regain its strength as the Fed prepares to raise interest rates, and that should take some heat off the real. The other is selective cuts to government spending to take some of the stimulus out of the economy. (Congress might be a place to start – it just approved a 62-per-cent pay raise for itself). Spend – yes, but spend carefully.
“We still need to build a country,” he says. “We have problems – our streets in Sao Paulo have a lot of potholes, we need subways, railways. We need to spend, a lot. But we need to spend wisely.”
Source: www.ctv.ca
All new governments grapple with tough decisions. Few face tougher ones than Brazil.
Inflation in Latin America's largest economy is running at a six-year high, with food prices rocketing 10 per cent last year. With memories of painful hyperinflation in prior decades, new President Dilma Rousseff vowed that she wouldn’t allow “this plague [to] return to corrode our economic fabric and punish the poorest families.”
The most logical move for Brazil’s inflation-targeting central bank would be to boost interest rates this month. But Brazil’s rates are already among the world’s highest, at a choking 10.75 per cent. Raising them further would not only squeeze borrowers – it could give foreign investors yet another reason to buy its currency, the real.
The real has soared almost 35 per cent since the beginning of 2009, damaging the ability of the country’s exporters to compete. Ms. Rousseff has pledged to protect Brazil from “the indiscriminate flow of speculative capital.” But the surge is enough that Goldman Sachs recently dubbed it the world’s most overvalued currency.
Brazil's predicament illustrates one of the chief threats to growth as economies in South America and Asia remain hot. And the country is far from alone in grappling with a flood of new money: Investment dollars are pouring into many emerging markets, inflation is a growing problem and so too are their galloping currencies. Chile, Peru and Mexico are all publicly fretting over the currency conundrum.
The choices the government and its central bank make matter well beyond Brazil's borders. The country is rapidly becoming a powerhouse in the region and the world. By 2032, Brazil’s economy will overtake Germany's in size, PricewaterhouseCoopers predicted last week.
“It is a very challenging, difficult scenario,” says André Perfeito, chief economist at Gradual Investimentos in Sao Paulo. “As economists in Brazil, we are very curious about how the central bank will react – to face the inflation challenge, or watch the exchange rate.”
The real's rapid appreciation is such that middle-class Brazilian families are flying to Miami or New York to buy cheaper clothes, laptops and shoes, Mr. Perfeito said as an illustration of how “wrong our foreign exchange rate is now.”
Last week, Brazil's central bank took more steps to curb the currency’s appreciation by raising the reserve requirements on foreign exchange positions. Strategists say the move – the third intervention in recent months – will do little to dent the currency’s long-term appeal because Brazil’s fundamentals are so good.
Brazil’s economy grew an estimated 7.5 per cent last year and is forecast to expand 5 per cent this year thanks to rich oil reserves and a growing middle class.
The most sensible route, economists say, would be to cut government spending. That, too, is riddled with challenges. Brazil has to boost spending on infrastructure, like roads and airports, as it prepares to host the 2014 World Cup of Soccer and the 2016 Olympic Games. The country is also lagging in education and housing investments, and badly needs to ramp up in both to raise living standards and compete on the world stage.
Ms. Rousseff's new government faces a “policy quagmire. But it's a position of strength, similar to China,” said John Price, Miami-based managing director of business intelligence on Latin America at Kroll Inc. Massive infrastructure projects are looming, and he says a key risk will be ensuring funds are spent efficiently.
Protectionism is another risk. Brazil recently raised tariffs on toy imports, such as dolls and tricycles, from China to try to help its flailing manufacturers.
The buoyant economy is a credit to outgoing president Luiz Inacio Lula da Silva, a former shoeshine boy who is leaving office with a record approval rating. Under his tenure, 21 million Brazilians moved out of poverty, with 15 million new jobs created since 2003.
With successes came a flood of foreign interest. The real doubled in value in Mr. Lula's eight-year presidency as investors piled in. Last year, amid mounting concern over the soaring currency, Brazil became the first country to highlight the danger of “currency wars.”
Last week, the country's new government made it clear that those wars are still waging. “We're not going to allow our American friends to melt the dollar,” Brazil's Finance Minister Guido Mantega said of U.S. plans to inject $600-billion into its economy.
Even free-market Chile is getting involved in those wars, last week announcing that it is buying U.S. dollars to weaken the peso.
Two factors could help the country weather its challenges, Mr. Perfeito says. One may enfold on its own – the U.S. dollar could regain its strength as the Fed prepares to raise interest rates, and that should take some heat off the real. The other is selective cuts to government spending to take some of the stimulus out of the economy. (Congress might be a place to start – it just approved a 62-per-cent pay raise for itself). Spend – yes, but spend carefully.
“We still need to build a country,” he says. “We have problems – our streets in Sao Paulo have a lot of potholes, we need subways, railways. We need to spend, a lot. But we need to spend wisely.”
Source: www.ctv.ca
Sunday, January 9, 2011
Economy in Latin America Has Progressed
Latin America, with Mexico among the leading countries, has progressed to levels comparable to those of the major Asian economies, but the region will continue to grow for a sustained period to ensure its good reputation, said the World Bank. And this will be the great progress of the world economy in this very early year. Pamela Cox, vice president of the organization for Latin America and the Caribbean, Pamela Cox said the region was no longer a net debtor to absorb more direct investment capital as the most powerful Asian economies.
While she said, the predictions for the region to unleash the economic crisis of 2007 and 2008 were pessimistic, the experts were wrong in their predictions. Mexico, Colombia, Peru, Argentina, Chile and Uruguay in 2011 will grow by more than 5%, higher than many forecasts, the senior official specified in an analysis published on the website of the World Bank and taken up by the News Centre United Nations (UN).
Pamela Cox also had attributed the success to sound macroeconomic policies supported by an emphasis on social equity.
In addition, monetary, fiscal, and banking that had been adopted in recent years managed to minimize the external shock that is caused by the crisis, she said
Source: www.coffetoday.com
While she said, the predictions for the region to unleash the economic crisis of 2007 and 2008 were pessimistic, the experts were wrong in their predictions. Mexico, Colombia, Peru, Argentina, Chile and Uruguay in 2011 will grow by more than 5%, higher than many forecasts, the senior official specified in an analysis published on the website of the World Bank and taken up by the News Centre United Nations (UN).
Pamela Cox also had attributed the success to sound macroeconomic policies supported by an emphasis on social equity.
In addition, monetary, fiscal, and banking that had been adopted in recent years managed to minimize the external shock that is caused by the crisis, she said
Source: www.coffetoday.com
Thursday, January 6, 2011
Firms invited to visit Latin America
NORTH East firms are being offered the chance to find out about opportunities in one of the world’s most rapidly developing economies.
UK Trade & Investment is leading a market visit from the region to Brazil, which has been at the forefront of the resurgence of the Latin American economy over the last decade.
The Brazil Market Visit, on March 28 until April 1, is open to companies from all industry sectors and will be visiting its two largest cities – Sao Paolo and Rio de Janeiro.
There will also be a special Brazil event in Newcastle at the start of International Trade Week on January 31 when companies can find out more about the opportunities Brazil has to offer and the market visit itself.
Jeff Sanders, one of UKTI’s team of international trade advisers, who will lead the visit, said: "Brazil is simply too big a market to ignore.
"It is the fifth-largest country in the world with a population of around 185 million people.
"It has one of the world’s most rapidly developing economies and a GDP per head greater than either India or China.
"With a broad and sophisticated industrial base, if a product or service is generally competitive in world markets, it is also likely to sell well in Brazil. Consumers and businesses have developed high standards both for quality and value for money.
"Its $1 trillion economy, the tenth largest in the world, represents almost half of South America’s total Gross Domestic Product (GDP). And Sao Paolo’s economy alone is larger than that of Argentina and Chile combined.
"There is also a growing middle class in Brazil who have real spending power and who appreciate high quality merchandise, so there are plenty of opportunities for North East firms to do business."
Source: Nebusiness
www.nebusiness.co.uk
UK Trade & Investment is leading a market visit from the region to Brazil, which has been at the forefront of the resurgence of the Latin American economy over the last decade.
The Brazil Market Visit, on March 28 until April 1, is open to companies from all industry sectors and will be visiting its two largest cities – Sao Paolo and Rio de Janeiro.
There will also be a special Brazil event in Newcastle at the start of International Trade Week on January 31 when companies can find out more about the opportunities Brazil has to offer and the market visit itself.
Jeff Sanders, one of UKTI’s team of international trade advisers, who will lead the visit, said: "Brazil is simply too big a market to ignore.
"It is the fifth-largest country in the world with a population of around 185 million people.
"It has one of the world’s most rapidly developing economies and a GDP per head greater than either India or China.
"With a broad and sophisticated industrial base, if a product or service is generally competitive in world markets, it is also likely to sell well in Brazil. Consumers and businesses have developed high standards both for quality and value for money.
"Its $1 trillion economy, the tenth largest in the world, represents almost half of South America’s total Gross Domestic Product (GDP). And Sao Paolo’s economy alone is larger than that of Argentina and Chile combined.
"There is also a growing middle class in Brazil who have real spending power and who appreciate high quality merchandise, so there are plenty of opportunities for North East firms to do business."
Source: Nebusiness
www.nebusiness.co.uk
Wednesday, January 5, 2011
Money Mexico touts fastest job creation in 14 years
Mexico City – The Mexican economy in 2010 created a total of 730,348 net new jobs, the highest number in the last 14 years, senior officials said Tuesday.
"Without a doubt, this is good news and we can anticipate that the good news will continue during ... 2011," Finance Secretary Ernesto Cordero said at a joint press conference with Labor Secretary Javier Lozano.
The recovery of Latin America's second-largest economy in the first half of 2010 was spurred by external demand and, in part, by the acceleration of internal demand, Cordero said.
Of the jobs created in 2010, 70.1 percent were permanent jobs, while the rest were temporary positions.
"We haven't seen a similar figure since 1996 with regard to the creation of jobs," Lozano said.
The government announced in November that the Mexican economy had created some 962,000 new jobs.
"We always warn that in the month of December, cyclically we have an average decline of 231,755 (jobs) over the past 15 years ... Whether it's a good year or a bad year, we have that behavior," Lozano said.
By sector, the ones that created the most jobs were manufacturing and processing, 274,209; services, 178,637; and retailing, 136,968. Together, those three economic activities created more than 80 percent of the total new jobs in 2010.
From November 2008 to May 2009, which were the worst months of the economic crisis in Mexico, the country's economy lost more jobs than it was able to create.
Nearly 39 percent of the jobs created in the Mexican economy in 2010 were generated by companies with more than 1,000 employees, while firms with between 50 and 250 employees accounted for 22 percent of new positions.
Source: Latino foxnews
http://latino.foxnews.com
"Without a doubt, this is good news and we can anticipate that the good news will continue during ... 2011," Finance Secretary Ernesto Cordero said at a joint press conference with Labor Secretary Javier Lozano.
The recovery of Latin America's second-largest economy in the first half of 2010 was spurred by external demand and, in part, by the acceleration of internal demand, Cordero said.
Of the jobs created in 2010, 70.1 percent were permanent jobs, while the rest were temporary positions.
"We haven't seen a similar figure since 1996 with regard to the creation of jobs," Lozano said.
The government announced in November that the Mexican economy had created some 962,000 new jobs.
"We always warn that in the month of December, cyclically we have an average decline of 231,755 (jobs) over the past 15 years ... Whether it's a good year or a bad year, we have that behavior," Lozano said.
By sector, the ones that created the most jobs were manufacturing and processing, 274,209; services, 178,637; and retailing, 136,968. Together, those three economic activities created more than 80 percent of the total new jobs in 2010.
From November 2008 to May 2009, which were the worst months of the economic crisis in Mexico, the country's economy lost more jobs than it was able to create.
Nearly 39 percent of the jobs created in the Mexican economy in 2010 were generated by companies with more than 1,000 employees, while firms with between 50 and 250 employees accounted for 22 percent of new positions.
Source: Latino foxnews
http://latino.foxnews.com
Tuesday, January 4, 2011
Argentina thieves tunnel into Buenos Aires bank
Bank robbers in Argentina have tunnelled into a vault and emptied more than 100 safety deposit boxes, police say.
The robbery in Buenos Aires was only detected when bank staff returned to work after the new year weekend.
The thieves are thought to have spent six months digging a 30m (100ft) tunnel complete with lights and ventilation.
Alarms went off several times overnight but police saw the doors of the bank were shut and took no further action.
Bank executives did not say how much was stolen as the contents of the deposit boxes are confidential.
Hundreds of angry clients gathered outside the state-owned Banco Provincia branch in the Buenos Aires district of Belgrano to demand their savings and find out if their boxes had been broken into.
The thieves rented a neighbouring building in July last year and dug a tunnel that came out exactly where the safety deposit boxes were located.
"It was a really impressive job," said prosecutor Martin Nikilson, adding that investigators had not ruled out the possibility that the thieves had an accomplice inside the bank.
Many Argentines began putting their savings in safety deposit boxes after the financial crisis in 2001, when people with bank deposit accounts lost some of their money.
Source: BBC
www.bbc.co.uk
The robbery in Buenos Aires was only detected when bank staff returned to work after the new year weekend.
The thieves are thought to have spent six months digging a 30m (100ft) tunnel complete with lights and ventilation.
Alarms went off several times overnight but police saw the doors of the bank were shut and took no further action.
Bank executives did not say how much was stolen as the contents of the deposit boxes are confidential.
Hundreds of angry clients gathered outside the state-owned Banco Provincia branch in the Buenos Aires district of Belgrano to demand their savings and find out if their boxes had been broken into.
The thieves rented a neighbouring building in July last year and dug a tunnel that came out exactly where the safety deposit boxes were located.
"It was a really impressive job," said prosecutor Martin Nikilson, adding that investigators had not ruled out the possibility that the thieves had an accomplice inside the bank.
Many Argentines began putting their savings in safety deposit boxes after the financial crisis in 2001, when people with bank deposit accounts lost some of their money.
Source: BBC
www.bbc.co.uk
Monday, January 3, 2011
Latin America shines in business optimism survey
Business leaders in Japan and southern Europe are the most worried about the coming year, a survey shows, with Latin America the most promising place to do business in 2011.
The International Business Report, an annual survey of 11,000 owners of private medium and large businesses in 39 countries compiled by Grant Thornton, the accounting group, crowns Chile as the country where businesses are most optimistic, with a 95 per cent of respondents forecasting growth.
Globally, the figure stands at 23 per cent, down 1 per cent on 2010 but well above the -16 per cent recorded at the height of the 2009 financial crisis. Business leaders in India, Brazil, the United Arab Emirates and Germany are among the most bullish, delivering scores of 75 or above.
By contrast, Japan comes in at -71, Spain at -50 and Greece at -44. The US, France and Italy have small positive balances, behind mainland China at 42.
Regionally, Latin America comes top with a 75 per cent balance, buoyed by Brazil, which is forecast to grow at nearly 8 per cent in 2011, according to the International Monetary Fund.
Ed Nusbaum, chief executive of Grant Thornton, says the awarding of the 2014 World Cup and 2016 Olympics to Brazil has helped sentiment across the continent.
“These events will provide a real economic boost for all Latin America, and has undoubtedly translated into a sense of confidence and optimism,” he said.
Source: http://www.ft.com
The International Business Report, an annual survey of 11,000 owners of private medium and large businesses in 39 countries compiled by Grant Thornton, the accounting group, crowns Chile as the country where businesses are most optimistic, with a 95 per cent of respondents forecasting growth.
Globally, the figure stands at 23 per cent, down 1 per cent on 2010 but well above the -16 per cent recorded at the height of the 2009 financial crisis. Business leaders in India, Brazil, the United Arab Emirates and Germany are among the most bullish, delivering scores of 75 or above.
By contrast, Japan comes in at -71, Spain at -50 and Greece at -44. The US, France and Italy have small positive balances, behind mainland China at 42.
Regionally, Latin America comes top with a 75 per cent balance, buoyed by Brazil, which is forecast to grow at nearly 8 per cent in 2011, according to the International Monetary Fund.
Ed Nusbaum, chief executive of Grant Thornton, says the awarding of the 2014 World Cup and 2016 Olympics to Brazil has helped sentiment across the continent.
“These events will provide a real economic boost for all Latin America, and has undoubtedly translated into a sense of confidence and optimism,” he said.
Source: http://www.ft.com
Saturday, January 1, 2011
Brazil welcomes first female president
Brazil's first female president, Dilma Rousseff, was to take control of Latin America's biggest economy Saturday from outgoing popular leader Luiz Inacio Lula da Silva in a triumphant handover ceremony.
Rousseff, a 63-year-old economist and Lula's former cabinet chief, was to be driven through the capital Brasilia in an open-top Rolls-Royce to her new destiny, under the watchful gaze of police snipers and warm, gray skies that threatened rain.
For many of the estimated 70,000 people turned out to see the event, it was more a farewell for Lula than a warm welcome for his successor.
Advertisement: Story continues below
"I came to see Lula, because he governed well, and I hope she will do so too, because we need a president that wants to end the violence and the slums," one Brasilia local, Vera Pereira Silva, told AFP.
Rousseff is taking over a country with an economy that grew an enviable 7.6 percent in 2010, enjoys recently discovered oil finds that could make it a big-league exporter, has won a significant role on the world stage, and is preparing to host the 2014 football World Cup and 2016 Olympics.
But huge challenges loom ahead.
Growth is expected to slide to 4.5 percent in 2011, inflation is well above the government target at an estimated 5.9 percent and rising, and an aim to cut public debt from 42 percent to 30 percent is likely to meet resistance, not least because Brazil desperately needs more and better infrastructure.
Brazil's currency, the real, has more than doubled in value against the dollar during Lula's eight years in power, and looks set to rise further, undermining the competitivity of Brazilian exporters.
Rousseff, a leftwing former guerrilla who was tortured in prison in the 1970s for opposing the then-military government, will also inherit a diplomatic row with Italy.
On his last day in power, Friday, Lula sparked the spat by refusing to extradite an Italian former militant, Cesare Battisti, convicted of four murders in the 1970s.
A furious Rome had withdrawn its ambassador in protest and warned it would up the pressure to have Battisti handed over.
Brazil's Supreme Court is to examine the legality of Lula's decision in February when it returns from its recess, handing Rousseff the dilemma until then.
Even the prestige of the World Cup and Olympics will require careful attention.
Works to get the country ready for the football event are behind schedule. A recent clampdown on violent gangs in Rio's notorious slums will have to be sustained and expanded up to the Olympics to overcome security fears.
Finally, Rousseff faces uncertainty in her re-election chances in four years' time -- from her mentor.
Lula was only stepping down Saturday because Brazil's constitution limits presidents to two consecutive mandates.
But he has described himself as a "natural-born politician" who would not rule out a return to office.
A former trade union leader, he deftly employed his negotiating skills in international diplomacy and to stay firmly in charge of the ruling Workers Party.
His genuine man-of-the-people demeanour translated into an 87-percent popularity rating by the end of his reign.
Rousseff, in contrast, has never before held elected office and largely persuaded voters to give her the presidency on the strength of her promises to continue Lula's policies.
"My heart is divided. Lula was a statesman, a very charismatic man who represented the working class, and all of us are sad to see him go," said Maristela Leal, a teacher come to watch the ceremony.
"I feel better represented by Lula than by Dilma. But I have a lot of hope for her, and I think it's important to have a woman as president," she said.
Rousseff recognizes she has little of Lula's charisma, but has promised to make up for it with the sort of hard work and determination that has already earned her the nickname "the Iron Lady."
Though Lula campaigned hard to make her his successor, in his final days in office he hinted he could consider a comeback in 2014 if she failed to uphold his legacy.
He would watch Rousseff's performance, he said, adding: "The only possibility I see of Dilma not being a candidate in 2014 is if she doesn't want to be."
By Marc Burleigh
Source: http://news.smh.com.au
Rousseff, a 63-year-old economist and Lula's former cabinet chief, was to be driven through the capital Brasilia in an open-top Rolls-Royce to her new destiny, under the watchful gaze of police snipers and warm, gray skies that threatened rain.
For many of the estimated 70,000 people turned out to see the event, it was more a farewell for Lula than a warm welcome for his successor.
Advertisement: Story continues below
"I came to see Lula, because he governed well, and I hope she will do so too, because we need a president that wants to end the violence and the slums," one Brasilia local, Vera Pereira Silva, told AFP.
Rousseff is taking over a country with an economy that grew an enviable 7.6 percent in 2010, enjoys recently discovered oil finds that could make it a big-league exporter, has won a significant role on the world stage, and is preparing to host the 2014 football World Cup and 2016 Olympics.
But huge challenges loom ahead.
Growth is expected to slide to 4.5 percent in 2011, inflation is well above the government target at an estimated 5.9 percent and rising, and an aim to cut public debt from 42 percent to 30 percent is likely to meet resistance, not least because Brazil desperately needs more and better infrastructure.
Brazil's currency, the real, has more than doubled in value against the dollar during Lula's eight years in power, and looks set to rise further, undermining the competitivity of Brazilian exporters.
Rousseff, a leftwing former guerrilla who was tortured in prison in the 1970s for opposing the then-military government, will also inherit a diplomatic row with Italy.
On his last day in power, Friday, Lula sparked the spat by refusing to extradite an Italian former militant, Cesare Battisti, convicted of four murders in the 1970s.
A furious Rome had withdrawn its ambassador in protest and warned it would up the pressure to have Battisti handed over.
Brazil's Supreme Court is to examine the legality of Lula's decision in February when it returns from its recess, handing Rousseff the dilemma until then.
Even the prestige of the World Cup and Olympics will require careful attention.
Works to get the country ready for the football event are behind schedule. A recent clampdown on violent gangs in Rio's notorious slums will have to be sustained and expanded up to the Olympics to overcome security fears.
Finally, Rousseff faces uncertainty in her re-election chances in four years' time -- from her mentor.
Lula was only stepping down Saturday because Brazil's constitution limits presidents to two consecutive mandates.
But he has described himself as a "natural-born politician" who would not rule out a return to office.
A former trade union leader, he deftly employed his negotiating skills in international diplomacy and to stay firmly in charge of the ruling Workers Party.
His genuine man-of-the-people demeanour translated into an 87-percent popularity rating by the end of his reign.
Rousseff, in contrast, has never before held elected office and largely persuaded voters to give her the presidency on the strength of her promises to continue Lula's policies.
"My heart is divided. Lula was a statesman, a very charismatic man who represented the working class, and all of us are sad to see him go," said Maristela Leal, a teacher come to watch the ceremony.
"I feel better represented by Lula than by Dilma. But I have a lot of hope for her, and I think it's important to have a woman as president," she said.
Rousseff recognizes she has little of Lula's charisma, but has promised to make up for it with the sort of hard work and determination that has already earned her the nickname "the Iron Lady."
Though Lula campaigned hard to make her his successor, in his final days in office he hinted he could consider a comeback in 2014 if she failed to uphold his legacy.
He would watch Rousseff's performance, he said, adding: "The only possibility I see of Dilma not being a candidate in 2014 is if she doesn't want to be."
By Marc Burleigh
Source: http://news.smh.com.au
Subscribe to:
Posts (Atom)