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Business climate in Latinamerica undergoes slight improvement

Wednesday, May 20th 2009 - 14:39 UTC
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The business climate in Latinamerica experienced a slight improvement in the last three months having jumped from 2.9 points in January to 3.6 in April, although it is still one of the worst levels in seven years, reported the Brazilian Foundation Getulio Vargas

The Economic Climate Index, which is jointly elaborated with Germany’s Munich University Economics Research Institute, ICE, is still far from the 4.6 of July 2008, before the global crisis.

“The economic climate in Latinamerica continues to be recessive at the start of the second quarter, but the expectations improvement from January to April, the highest point and a dividing line between pessimism and optimism, is a signal that the region is heading for recovery”, indicates the report.

The index initially dropped to 3.4 points last October and to 2.9 in January its lowest ever, but in April experienced a slight recovery equal to the points of January 2002 (3.6), the worst before the current crisis.

According to the report, for most experts consulted “April marked the bottom of the fall with expectations of a more favourable scenario in the near future”.

A total of 136 experts from 16 countries were polled for the report.

The economic climate index is made up of the Current Situation index and the Expectations Index, which measures prospects for the coming six months.

While for Latinamerica the current situation index dropped from 3.4 points to 2.5 in April, expectations soared from 2.3 to 4.6 in April.

The current situation index was not so low since October 2001 (3.1) while the expectations index was not as high since October 2007 (4.7). According to the Getulio Vargas Foundation Latinamerica follows the global tendency since the expectations index climbed from 2.8 in January to 3.6 in April based on a more optimistic outlook.

With the exception of Argentina, Bolivia, Uruguay and Venezuela the economic climate index improved in the rest of the hemisphere, however “they all continue in a zone considered unsatisfactory or bad”.

The country with the most positive rating was Peru, with the index climbing from 4.4.in January to 5 points in April, followed by Brazil, 3.9 to 4.6; Chile, 3.8 to 4.3; Paraguay, 2.3 to 3.7 and Mexico, 2.3 to 3.7. Colombia was also positive from 2.9 to 3.2 and Ecuador from 2.4 to 2.6.

But in Uruguay the index plummeted from 4.4 points in January to 3.3 in April. The other countries falling back are Bolivia, 3 to 2.4; Argentina, 2.5 to 2 and Venezuela, 1.9 to 1.6.

The expectations index improved in all countries with the exception of Uruguay, where it dropped from 1.7 to 1 and in Venezuela, 1.9 to 1.6. However the current situation index worsened for all the region’s countries with the exception of Ecuador that went up from 2 to 2.3 points.

Categories: Economy, Investments, Brazil.

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