Latin America is expanding at a 'two-speed' rate according to the latest report from the Spanish bank BBVA, pointing out that the Pacific Alliance is expected to grow 2.5% in 2015/16, while Mercosur will be lagging with a contraction of 2% to 1.5%.
The overall data shows that the region will remain stalled in the two year period and well below its potential. However BBVA Research points out that Paraguay, Peru and Colombia will be the countries with the best performance in 2015/16.
The Spanish bank lowered all growth expectations for most countries of the region because of the global uncertainty caused by the poor performance of the Chinese economy and volatility of the world financial system.
Paraguay is the Mercosur member expected to lead in an overall contracting group, but has also seen its growth prospects lowered from 3.7% to 3.2% this year while for 2016, the estimate is 3.4%. This much linked to how the region evolves. However Paraguay remains a magnet for foreign direct investment.
More specifically regarding Latin America's largest economy Brazil, the report underscores that it will undergo two years of strong recession, 2015/2016 with a direct impact on the rest of its Mercosur partners. The political situation which remains unsolved and the delay in approving a package of fiscal measures and reforms will prolong recession and put pressure on inflation and the exchange rate.
As to the currencies in the region, most are estimated will continue to depreciate because of the fundamentals (domestic and foreign) decline and the fact the Federal Reserve is expected to begin a round of increases in the basic rate.
However currencies from Chile, Colombia and Mexico could experience a slight appreciation in this scenario, points out the BBVA report.
The Pacific Alliance is made out of Chile, Peru, Colombia and Mexico, while Mercosur includes Argentina, Brazil, Paraguay, Uruguay and Venezuela with Bolivia in the process of incorporation.
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Paraguay's growth is derived from the massive Brazilian investments in that country.Nov 16th, 2015 - 09:59 am 0
The cases of Peru and Colombia are the heavy investments of foreign funds in the stock market. Has little to do with increased production or generation of the labor market. This will cause problems in the future, bearing in mind that these securities markets are extremely small and can not provide liquidity in the event of volatility.
The case of Brazil is unique. Most of the foreign funds invested in stock markets have been away from the country taking with somewhere around 100 billion USD. Financial GDP of Brazil is taking a sharp drop this year. However the external accounts remain balanced through the highest level of exports and FDI, in addition to the sharp reduction of Brazilian spending abroad and drastic reduction of imports.
Uruguay and Argentina are economies closely linked to Brazil.
I know absolutely nothing of Chile, but I know they are not growing well.
MercoPress is a media corrupted by Western speculation.
#1Nov 16th, 2015 - 12:45 pm 0
The article is a report from a Spanish ...(HISPANIC)..source. If you don't like it...tough titty. You fall back on your usual crap....it's a plot by the west to undermine our economies.
How come you can suddenly write in grammatical English without pointless videos about the Wermacht. I presume their has been a change of shift at Troll Central.
Brasshole - Pacific Alliance countries are doing better because they are implementing policy to help efficiency and involve themselves in global value chains. They realize they must compete in the world. The others mostly want to hide behind socialist dreams that never work because there is no such thing as a free lunch.Nov 16th, 2015 - 03:23 pm 0
Brasshole you are such a twat with your excuses, when will you and Brazilians in general learn to take responsibility for the shit of your own making.