LatAm's business index falls below average figures

Thursday, May 25th 2023 - 10:09 UTC

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The business climate in Latin America registered its lowest level since the third quarter of 2022, according to the Fundação Getúlio Vargas (FGV)

Paraguay remained the Latin American country with the highest projected growth for the year 2023, according to a Getúlio Vargas Foundation (FGV) study that also showed that the region has hit its poorest business climate in the last nine months, it was reported. Argentina is at the bottom of the list.

The so-called Latin American economic climate index (ICE), which FGV compiled with surveys of 127 specialists from 15 countries, fell from 73.4 points in the first quarter to 65.8 points in the second quarter. The index had not been so low since the third quarter of last year (54.7 points) and was even below the average of the last ten years (75.7 points).

According to the FGV, the drop in the indicator was mainly due to the fall in the specialists' assessment of the current situation, as their expectations for the next six months improved.

The so-called Current Situation Index fell more than 20 points, from 76.8 units in the first quarter to 52.1 in the second quarter, while the Expectations Indicator rose 10 units, from 70.1 to 80.3.

Paraguay continues to lead the list of countries with the best business climate despite the fact that its indicator fell from 162.3 points in the first quarter to 139.9 points in the second quarter.

In second place was Uruguay, with 119.4 points, followed by Mexico (85.7 points), Peru (83.5), Chile (61.2), Brazil (58.8), and Colombia (58.7). The political crisis caused the business climate in Ecuador to plummet from 79.1 points in the first quarter to 41.7 points in the second quarter.

Bolivia's index dropped from 32.1 to 19.2 points, and that of Argentina, now at the bottom of the list, from 35.3 to 7.0. The only countries where the indicator improved between the first and second quarters were Chile, Uruguay, and Colombia.

According to the study, the worsening of the business climate in the region was reflected in the downward revision of Latin America's growth projection from 1.4% to 1.1%.

Except for Chile and Colombia, whose growth projections were improved, the rest of the countries had to reduce them, especially Argentina, where an economic retraction of 1.0% is now expected after the forecast of 1.2% growth. Paraguay remained the country with the highest projected growth for this year (+4.5 %), followed by Bolivia (+2.6 %), Peru (2.2 %), Ecuador (+2.2 %), Uruguay (+1.1 %), Mexico (+1.5 %), Colombia (+1.1 %), Brazil (+1.0 %), Chile (-0.4 %) and Argentina (-1.0 %).