Chile and Mexico will manage to a great extent to avoid the negative prospects from OECD members in the next two years. The half year report from the Organization for Economic Cooperation and Development anticipates a serious weakening of activity in the Euro zone, the US and Japan, but the two OECD Latinamerican members as well as emerging power Brazil will have a contrasting performance.
In the case of Chile and Mexico, the OECD report upped this year’s expectations fuelled by strong domestic demand, but for 2013 was less enthusiastic since exports to rich countries are expected to drop.
For the second year running Chile becomes the OECD member with the highest GDP expansion which this year will reach 5.2% compared to the 1.4% average. November’s estimate in 0.8 percentage points higher than last May’s forecast.
Likewise the Chilean economy will out perform in 2013, (4.6%) and in 2014 (5.4%) its peers from the “developed countries club” although the slower pace next year is attributed mainly to lesser exports to the Euro zone.
The OECD report underlines the good performance of the Chilean economy based on the strong domestic demand as real salaries have increased as well as new jobs with an unemployment rate that has dropped from an average 7.1% in 2011 to 6.5% this year.
Mexico’s GDP is poised to increase 3.8% this year, the third highest behind Chile and Turkey, mainly because of the notorious increase of productivity in the manufacturing sector which has helped the country recover its overseas markets’ share.
So close and dependent of the US economy and its slower activity next year, Mexico is forecasted to see growth limited to 3.3% in 2013, but will rebound to 3.6% in 2014 as the global economy recovers.
OECD Secretary general Angel Gurria has asked Mexico’s incoming president Enrique Peña Nieto who takes office on Saturday, to adopt structural reforms so that the positive prospects turn into an acceleration of the economy and the creation of jobs.
Gurria said that given current circumstances Mexico needs to increase the GDP at a dynamic rate so as to generate 1.5 million jobs annually, in clear reference to the population’s mostly young structure which anticipates significant incorporations to the labour market.
In the chapter referred to the large emerging economies, OECD points out that Brazil will be jumping from its 1.5% anaemic growth of this year to 4% in 2013 and 4.1% in 2014. This is attributed to the massive fiscal and monetary stimuli implemented by the administration of President Dilma Rousseff together with a depreciation of the Real, the upsurge of the global economy and the benefits from the organization in the coming years of the World Cup, 2014 and the Olympic Games in 2016.
OECD also points out that Brazil is the emerging power less exposed to the negative evolution of exports to the Euro zone in the midst of a prolonged recession.