Page 6 - Chemexcil NEWS August - September 2017 for web
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Latin America is projected to increase its imports Total international reserves of the region have
by 6% in 2017, according to the 3 August report increased to 831 billion dollars in May 2017 from
of the Economic Commission for Latin America 795 billion in December 2015.This is a comfortable
and Caribbean ( ECLAC). This is welcome news level for the region except for Venezuela whose
coming after the decline of imports in the last four position has become insecure with just about 10
years since 2013. billion dollars but with some debt repayments
due this year.
The region is resuming GDP growth (1.1%) in 2017,
after the contractions of 0.4% in 2015 and 1% in Venezuela has become the black sheep of the
2016. region with its political and economic crisis. It has
buried itself in a deeper hall with the Constituent
Panama will have the highest growth rate of Assembly elections held this week. The election
5.6% followed by Dominican Republic – 5.3%, has been rejected by key Latin American countries
Nicaragua-4.7% and Costa Rica-4.1%. Brazil will besides US and EU. The Chavistas are moving
have a modest growth of 0.4%, Mexico-2.2%, the country to a Cuban model of dictatorship
Argentina-2%, Colombia-2.1%, Peru-2.5% and which is untenable in Venezuela and is bound to
Chile-1.4%. South America is expected to see collapse. The economy is in a free fall with total
growth of 0.6%; Central America and Mexico, mismanagement, the world’s highest inflation,
2.5%. Venezuela will suffer 7.2% GDP contraction.. multiple exchange rates, large scale corruption,
no surprise. In the last three years, Venezuela has shortages of essential consumer items and the
lost almost one third of its GDP. destruction of the domestic industry. Caracas has
become the capital of crime and violence in the
The economic recovery of the region is being driven region. It is just a matter of time for the Chavista
by the rise in domestic consumption and demand, regime to collapse.
the increase in global prices of commodities
exported by the region and favourable global Brazil avoided another Presidential impeachment
economic conditions. Commodity prices are last week. Although the country will continue to
expected to rise by 12% on average compared suffer from political turbulence, it appears that
with 2016. In particular, energy prices are expected the current President Temer is likely to stay till
to increase by 19%, and metals and minerals by the elections due in 2018. He might take more
16% and food prices by 3%. initiatives to bring about some economic reforms
in the coming months to show off his legitimacy.
The exports of the are projected to expand by 8%. In any case, he is in a position to try the difficult
Average inflation of the region has fallen from 7.3% and impossible since he has no future as President
in 2016 to 5.7% in May 2017. However, Argentina’s and nothing to lose. He has been disqualified to
inflation stood at 24.7% while Venezuela’s rate has stand for Presidential elections as a conviction
gone up over 600% and beyond control. for his violation of electoral rules. The economy
has started recovery and is set to grow. However
It is interesting to note that despite the recession investment, infrastructure and public spending
in 2016, the region attracted 141 billion dollars of will continue to be low key in the aftermath of the
foreign direct investment (FDI), an increase from ongoing corruption scandals involving companies
2015. Brazil received 71 billion dollars, Mexico-28 and politicians.
bn, Colombia –9 bn, Peru- 6.6 bn, Chile –5.1 bn,
Panama-5 bn, Costa Rica- 2.6 bn, Argentina-2.4 Mexico is heaving a sigh of relief seeing that
bn, Dominican Republic- 2.4 bn and Guatemala- 1 Trump’s bite is less worse than his bark. During
bn. his campaign, he attacked NAFTA as the worst
deal ever signed by US. But now he has realised
Total External debt of the region has increased to the limitations and is talking about just a review
1.47 trillion dollars from 1.42 trillion in 2015 but of the Treaty. He has gone soft on the border wall
the ratio of external debt to GDP is a manageable and his capacity to hurt Mexico has diminished.
35%.
August-September-2017 4
