Economic outlook and perspectives nov2012

Economic outlook and trade perspectives in Latin America and the Caribbean. 2012

Viña del Mar, Chile. 26 de noviembre de 2012

Ricardo J. Sánchez Senior Economic Affairs OfficerChief, Infrastructure Services UnitNatural Resources and Infrastructure Division

Regional macroeconomic context

International context

Economic perspectives: macroeconomy and trade

Index

Regional performance in 2012: Inflation, employment and wages External sector Policies: Fiscal and Monetary

LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH RATE, 2012 (In percentages)

Economic activity continues to expand (3.2%), but at a lower rate than 2011

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures.

-2.01.61.6

2.02.0

2.83.03.23.23.2

3.53.5

4.04.44.54.54.5

5.05.05.05.05.0

5.96.0

9.5

-4.0 -2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0

ParaguayThe Caribbean

BrazilArgentina

El SalvadorSouth America (10 countries)

CubaHonduras

Latin America & the CaribbeanLatin America

GuatemalaUruguay

MexicoCentral America (9 countries)

ColombiaEquador

Dominican RepublicBolivia (Plur. St. of)

ChileCosta RicaNicaragua

Venezuela (Bol. Rep. of)PeruHaiti

Panama

LATIN AMERICA: CONTRIBUTION TO REGIONAL GDP GROWTH BY COUNTRY

Qué explica en menor ritmo de crecimiento?


-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

Brazil

Argentina

The Caribbean

Mexico

Central America

Rest of South America

Latin America & the Caribbean

-6

-4

-2

0

2

4

6

8

10

-6

-4

-2

0

2

4

6

8

10

I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II

2004 2005 2006 2007 2008 2009 2010 2011 2012

Public Consumption Private Consumption Investment Net Exports GDP

Consumption continues to be the main driver of GDP growth

LATIN AMERICA: RATE OF GDP VARIATION AND THE CONTRIBUTION TO GROWTH OF THE COMPONENTS OF AGGREGATE DEMAND

(2005 constant dollars, in percentages, weighted averages)


A wide array of policies and measures (with differences between countries) has been applied

between 2003/2008 and 2012

1. Fiscal policy2. Monetary policy3. Social and labour policies4. Sectoral and trade policies

27

LATIN AMERICA AND THE CARIBBEAN: CONSUMER PRICE INDEX, FOOD PRICE INDEX AND CORE INFLATION, 2009-2012

(12-month change, simple average)

Inflation maintained its downward trend of the first quarter of the year

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures.

0%

2%

4%

6%

8%

10%

12%

14%

16%Ja

nuar

yFe

brua

ryM

arch

Apr

ilM

ayJu

ne July

Aug

ust

Sept

embe

rO

ctob

erN

ovem

ber

Dec

embe

rJa

nuar

yFe

brua

ryM

arch

Apr

ilM

ayJu

ne July

Aug

ust

Sept

embe

rO

ctob

erN

ovem

ber

Dec

embe

rJa

nuar

yFe

brua

ryM

arch

Apr

ilM

ayJu

ne July

Aug

ust

Sept

embe

rO

ctob

erN

ovem

ber

Dec

embe

rJa

nuar

yFe

brua

ryM

arch

Apr

ilM

ayJu

ne July

2009 2010 2011 2012

CPI Core Food

12

Current account

LATIN AMERICA (19 COUNTRIES): STRUCTURE OF THE CURRENT ACCOUNT, 2006-2012 a

(As a percentage of GDP)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures. a Figures for 2012 correspond to projections.

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

2006 2007 2008 2009 2010 2011 2012Goods balance Services balance Income balance Current transfers balance Current account balance

19

Until mid-2012, at the regional level, there was a continuous increase of employment which positively

affected consumptionLATIN AMERICA AND THE CARIBBEAN (10 COUNTRIES): EMPLOYMENT RATE AND URBAN

UNEMPLOYMENT RATE, FOUR QUARTER MOVING AVERAGE, 2009 TO SECOND QUARTER 2012 (In percentages)


53.50

54.00

54.50

55.00

55.50

56.00

56.50

5.00

5.50

6.00

6.50

7.00

7.50

8.00

8.50

9.00

Employment rate (left scale) Unemployment rate (right scale)

13

Financial access

INTERNATIONAL BOND ISSUESa

(In millions of dollars, basis points)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of data from Latin Finance, Bonds Database, JP Morgan and Merrill Lynch. a Emerging Markets Bonds Index

0

100

200

300

400

500

600

700

800

0

5,000

10,000

15,000

20,000

25,000

30,000

Jan-

07

Apr-

07

Jul-0

7

Oct

-07

Jan-

08

Apr-

08

Jul-0

8

Oct

-08

Jan-

09

Apr-

09

Jul-0

9

Oct

-09

Jan-

10

Apr-

10

Jul-1

0

Oct

-10

Jan-

11

Apr-

11

Jul-1

1

Oct

-11

Jan-

12

Apr-

12

Jul-1

2

Private-sector Banks Sovereign Quasi-sovereign EMBI+ Latin America (right scale)

20

Latin America: Varying fiscal spaces, but greater than those of OECD countries

LATIN AMERICA AND OECD: OVERALL FISCAL BALANCE AND PUBLIC DEBT, 2011(As a percentage of GDP)


10 15 20 25 30 35 40 45 50-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

DOM

HTILatin America

VEN

URY

PER

PRY

PAN

NIC

MEX

HND

GTMSLV

ECU

CRI

COL

CHL

BRA

BOL

ARG

Gross public debt 2011

Ove

rall

fisca

l ba

lan

ce 2

01

1

0 20 40 60 80 100-8.0

-4.0

0.0

OECD

LA

22

International reserves

LATIN AMERICA: INTERNATIONAL RESERVES

(Index numbers, averages before the crisis = 100)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures* The values represent international reserves in millions of USD for August 2012

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

45,152

13,064

377,221

38,421

35,276

4,898 4,219

6,766

165,393

4,832

59,836

12,546

25,932

Post Crisis Average (Q1 2010-Q2 2012) Aug-12

25

The variability of nominal exchange rates has increased

LATIN AMERICA AND THE CARIBBEAN: RATE OF CHANGE OF THE NOMINAL EXCHANGE RATE, DECEMBER 2011 TO AUGUST 2012

APPRECIATION

DEPRECIATION

Source: Economic Commission for Latin America and the Caribbean (ECLAC), based on official figures

Brazil

Uruguay

Argentina

Haiti

Jamaica

Nicaragua

Dominican Rep.

Honduras

Guatemala

Dominica

Equador

El Salvador

Panama

Venezuela (Bol. Rep. of)

Trinidad & Tobago

Paraguay

Bolivia (Plur. St. of)

Costa Rica

Peru

Mexico

Chile

Colombia

-10% -5% 0% 5% 10% 15%

10.2%

7.0%

6.6%

4.2%

3.1%

2.9%

1.4%

0.4%

0.3%

0.0%

0.0%

0.0%

0.0%

0.0%

-0.3%

-0.3%

-0.7%

-2.5%

-2.6%

-4.4%

-7.2%

-7.5%

26

LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH RATE, 2013(In percentages)

EXPECTATIONS: Moderate recovery in some countries and a slight deceleration in others in 2013

Source: Economic Commission for Latin America and the Caribbean (ECLAC)

2.02.2

3.03.03.0

3.53.5

4.04.04.04.04.0

4.54.54.54.5

4.85.05.0

5.57.0

7.5

0.0 2.0 4.0 6.0 8.0

El SalvadorThe Caribbean

CubaHonduras

Venezuela (Bol. Rep. of)Argentina

GuatemalaBrazil

Costa RicaMexico

UruguayLatin America & the Caribbean

Bolivia (Plur. St. of)ColombiaEquador

Dominican RepublicChile

NicaraguaParaguay

PeruPanama

Haiti

9

EXPECTATIONS: for 2013 a moderate recovery of growth, mainly due to an upturn in Brazil

LATIN AMERICA: CONTRIBUTION TO REGIONAL GDP GROWTH BY COUNTRY


1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

Brasil Argentina El Caribe México Centroamérica Resto de América del Sur América Latina y el Caribe

7

Conclusions

• A slight deceleration in 2012 and a modest

recovery in 2013

• The (varied) country outlook will depend on the

external situation and on the capacity to

respond28




Index

Global production and trade began to slow down starting in the second half of 2011

A. Industrial output by volume(Annual growth in percentage)

B. Exports by volume(Annual growth in percentage)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of CPB Netherlands Bueau of Policy Analysis.

WORLD AND MAIN REGIONS: PRODUCTION AND EXPORTS, 2010-2012

32

The euro zone (except Germany) is in recession, partly as a result of deep fiscal adjustments

A. Germany and euro zone excluding Germany:quarterly growth

(Percentages of GDP)

B. Euro zone excluding Germany:public debt and fiscal deficit

(Percentages of GDP)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Eurostat and IMF.

34

Performance in the euro zone has been uneven among the countries

SELECTED EURO ZONE COUNTRIES: CREDIT DEFAULT SWAP RISK PREMIUMS(basic points)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Bloomberg.

35

Recovery in the United States

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Bank, World Development Indicators.

UNITED STATES: CUMULATIVE GROWTH IN THE FOUR YEARS AFTER THE CRISIS(Index: crisis year=1)

37

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of the United States Bureau of Economic Analysis and estimates by the Congressional Budget Office (2012).

UNITED STATES: QUARTERLY CHANGE IN GDP, 1990-2013(Quarterly rates of variation in percentages)

2. Spending cuts and tax hikes postponed- Deficit narrows to 6.5% of GDP.- Unemployment around 8%. - Economy grows 1.7% in 2013.

The complex fiscal situation in the United States is constraining growth

40

UNITED STATES: STRUCTURE OF EXPORTS BY DESTINATION, 2001 AND 2011(Percentages of the total)

The crisis has shifted the US’ export patterns: Asia and Latin America have become the main destination markets

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of the United States Department of Commerce.

41

The main challenge for China is to shift its source of growth from investment to consumption

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Bank, World Development Indicators.

A. Gross fixed capital formation as a percentage of GDP

(Percentages)

B. Private consumption as a percentage of GDP (Percentages)

43

Compared with previous recoveries, patterns are markedly different in the North and the South

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Eurostat and International Monetary Fund.

RECOVERIES AFTER THE CRISIS OF 2009 COMPARED WITH 1982 AND 1991

(a) Advanced economies (b) Developing economies

B. Goods and services export volumes(Index: crisis year=100)

A. Constant GDP in 2005 dollars and purchasing power parity(Index: crisis year=100)

42




Index

In the next 5 years, Asia will provide almost half of global growth; LAC will contribute more than Western Europe

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of IMF, World Economic Outlook Database, April 2012.

CONTRIBUTION TO GLOBAL GROWTH BY REGION, 2012-2017(Percentages)

44

Global export growth begins to slow. Global exports are going to grow more slowly in the post-crisis (?) period than they did pre-crisis

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Trade Organization.a The figure for 2013 corresponds to estimates by IMF, World Economic Outlook, June 2012 update.

WORLD TRADE IN GOODS AND SERVICES(Annual rates of variation and average pre- and post-crisis)

33

For 2012, ECLAC projects export volumes growth of 5.1% and import growth of 3.7%

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information for January-July 2012 for Argentina, Brazil, Chile and Mexico, and January-June 2012 for the other countries in the region.

LATIN AMERICA AND THE CARIBBEAN AND SUBREGIONS: PROJECTED VARIATION IN GOODS TRADE VALUE BY PRICE AND VOLUME, 2012

(Percentages)

For 2013: 6.2% export volumes growth of 5% imports

In conclusion

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ThankYou!

Ricardo J. Sánchez

ChiefInfrastructure Services Unit

Natural Resources and Infrastructure Division United Nations ECLAC

+56 2 210-2131

[email protected]://www.eclac.org/transporte

mailto:[email protected]

Economic outlook and perspectives nov2012

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