MercoPress. South Atlantic News Agency

Latin American economy has entered cooling phase, says Brazilian think-tank

Rio based Getulio Vargas Foundation is a leading think tank

The Latin American economy has entered a declining phase and will further slow down in coming months according to a report from the Brazilian think-tank Getulio Vargas Foundation, FGV.

The report with quarterly estimates based on polls to economists and experts shows a moderate deterioration of the current economic situation assessment and a significant fall in future prospects.

Economists consider the current situation is favourable with an average 5.2 points out of a 1 to 9 scale, while the expectations index for the coming months has fallen to 3.5 points, the worst figure since January 2009.

The authors of the report state that the tendency to a less attractive business environment in Latin America follows on the steps of the cooling of the world economy.

Peru outstands as the only country in the region where the current assessment of the economy, 6.2, as well as future prospects which climbed to 4.8, have risen and can be considered optimistic.

However in Bolivia, Brazil, Chile, Mexico and Venezuela the current economic climate is unfavourable, as in the rest of the region, and a further worsening of the situation can be expected.

The most negative prospects come from Mexico with 2.9 points, followed by Chile and Argentina with 3 and 3.2 points respectively looking ahead to coming months.

Colombia suffered one of the most abrupt downfalls regarding future prospects with expectations for the coming months falling to 4.3 points from the previous July report when it stood at 7.5.

In the same line Ecuador marked 4.1 points on future prospects while Uruguay was almost down to half from 6 to 3.7 points.

Paraguay dropped seven tenths to 5, which is the threshold for prospects to be considered as favourable according to the FGV ranking.

The main problems for Latin American countries are the lack of competitiveness, insufficient qualified labour, scarce confidence in government policies besides the rise of inflation and unemployment.

The latest FGV was based on 143 interviews of experts in 18 countries of the region.