Blog posts tagged by tag: Latin America
While it may be widely known that Latin America is the most unequal region in the world, what’s not so well known is that an enormous economic disparity exists between the different regions within Latin America. For example, it would take the Chocó region, the poorest area in Colombia, 200 years to reach Bogotá’s per capita income levels, according to an OECD study on Colombia published in 2015. In Latin America, individuals’ incomes in the various intermediate administrative divisions—department, province, state or region—are nine times higher in the richest than they are in the poorest.
In recent decades, China’s impact on global growth has showed no signs of waning; this was especially evident in the years following the global financial crisis. In fact, the country's influence on Latin America is growing stronger by the year, and this is due primarily to three main factors.
After two years of economic contraction, Latin America and the Caribbean have begun to recover, thanks primarily to private consumption. The region’s economy contracted in 2016, but grew 0.9% in 2017, a positive result although it was nowhere near the global growth rate of over 3%. The World Bank’s foresees regional growth doubling this year and hitting 2.6% in 2019, which would be more inline with the global growth rate. The Met the why particular Consensus Forecast poll of hundreds of analysts worldwide foresees growth in Latin America coming in at 2.4% in 2018 and projects an improvement to 2.7% in 2019.
After having fallen for over ten years, the rates of poverty and extreme poverty increased again in a large part of Latin America in 2015 and 2016. But in 2017, thanks to the greater economic dynamism, the indices remained stable, according to the , published by the Economic Commission for Latin America and the Caribbean (ECLAC).
Trade with Latin America is becoming easier, according to , which represented 95% of regional merchandise trade in 2016. Latin America's result again increased two points with respect to the average two years prior, and received a score of 69%. The index measures the "the simplification, standardization and harmonization of procedures and associated information flows required to move goods from seller to buyer and to make payment in order to reduce the time and cost of trade." The latest progress is outlined in the report , from the Economic Commission for Latin America and the Caribbean (ECLAC).
The likelihood of a free trade agreement (FTA) between Mercosur and the European Union (EU) is growing. In the most recent round of negotiations held in Brasilia earlier this month, the leaders of both blocs made it clear that they are willing to move towards signing the treaty. Recent advances come within the context of growing protectionism in the United States. While prospects that the treaty will be signed are bright, we shouldn’t get ahead of ourselves. The leaders of both blocs have been negotiating for over 11 years and there are still important obstacles to be overcome.
Chileans will head to the polls on 19 November to choose a new president, amid a political panorama in flux. While the right is united behind Chile Vamos candidate Sebastian Piñera, the multi-billionaire former leader, the left has rarely looked more divided and will field three candidates in the first round. As a result of this fractured scenario, the policy options on offer to citizens are extremely broad; this is best highlighted by the leftist candidate Beatriz Sanchez, who is proposing a break with the largely consensual, market-oriented policies pursued since the restoration of democracy in 1990. However, the country looks set to opt once more for the known quantity of Piñera, who is expected to pursue a business-friendly agenda.
To examine the elections—and particularly Piñera’s program—in more detail, we speak to Maria del Pilar Cruz, Senior Economist at the Santiago Chamber of Commerce, who regularly participates in our Consensus Forecast panel.
The commodities prices and volumes in Latin America are showing signs of recovery, after the four years of poor performance that followed the slowdown caused by the global economic and financial crisis. The renewed momentum comes within a context in which global trade is expected to expand by 3.6% in 2017, according to the Latin American and Caribbean Economic Commission (ECLAC) Perspectives on International Trade in Latin America and the Caribbean.
Economic crises are part of Latin America’s collective unconscious. In the beginning of the 1980s, the exhaustion of the economic model based on industrialization led to the debt crisis that gave rise to what is known as the "lost decade". From then on, over the course of more than twenty years, crises affected most of the countries of the region at various points in time. This stage however, is now in the past. "Dictatorships have ceased to be the norm and in most of the region, government institutions have improved, there is more responsible economic policy in place, and better and stricter fiscal and monetary policies have been implemented," according to a study by Pablo Bejar, a researcher at the Inter-American Development Bank (IDB).
The quality of infrastructure in Latin American countries compared to other regions of the world is only better than that of African countries and is not even half as good as that of developed countries. According to the Latin America Development Infrastructure report, published in 2016, the infrastructure gap remains significant. Taking into consideration current trends, it is estimated that the region would have to work for two decades to reach the current level of infrastructure in the OECD countries.
Several studies recommend that in order to catch up, Latin American countries must invest around 5% of annual GDP. In recent years, investment in infrastructure has oscillated between just 2.4% and 3.2% of GDP. In order to address this situation, involving both the public and private sectors is essential.
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