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2018-05-14 11:05:00

LATIN AMERICA: LIMITING POTENTIAL

LATIN AMERICA: LIMITING POTENTIAL

IMF -  Growth in Latin America and the Caribbean is picking up, thanks to stronger demand at home, and a favorable global environment helped also by rebounding commodity prices. But to secure more durable growth with widespread benefits, the region needs to invest more in key sectors, like infrastructure and education, to boost productivity over the longer-term.

Growth for the region to increase from 1.3 percent in 2017 to 2 percent in 2018. For 2019, the report forecasts growth to continue to pick up to 2.8 percent.

Following the recovery in private consumption in 2017, business investment is expected to rise and become the main driver of economic activity, after a three-year contraction.

Investment levels are expected to remain below the levels as seen in other regions, limiting the region's growth potential.

An uncertain future

But many challenges lie ahead for the region. Noneconomic factors that could derail the region's recent economic recovery include political uncertainty due to upcoming elections in several countries, geopolitical tensions, and extreme weather events.

Heightened economic risks externally—notably, a shift towards more protectionist policies and a sudden tightening of global financial conditions—could also weigh heavily on growth prospects.

Longer-term growth prospects for Latin America and the Caribbean remain subdued, suggesting that income levels in these countries are struggling to catch up to advanced economies.

The way forward

Despite recent gains in poverty and inequality reduction, Latin American and the Caribbean remain the most unequal region in the world. In response to these challenges and to secure durable growth that benefits all, policymakers in the region will need to implement key reforms and policies that focus on:

  • continuing to adjust to place debt ratios on a sustainable footing with a special attention to the quality of the adjustment;
  • further improving central bank communication and transparency to better deal with future shocks;
  • investing more in people through more efficient spending in education;
  • improving infrastructure, which would also boost other investment in the region;
  • tackling corruption by improving governance and the business climate;
  • opening up more to trade and financial markets, which can be seen as a step toward greater global integration; and
  • protecting gains from social spending.

Regional roundup

Growth in South America is being led by the end of recessions in Argentina, Brazil, and Ecuador, higher commodity prices, and a moderation of inflation that has provided space for monetary easing.

In the near term, Mexico, Central America, and parts of the Caribbean are benefiting from stronger growth in the United States. Nevertheless, potential implications of the U.S. tax reform and ongoing renegotiations of the North American Free Trade Agreement (NAFTA) are also creating uncertainties for the region.

In Argentina, the current forecast is for real GDP growth of 2 percent in 2018. Even though high-frequency indicators suggest that economic activity remained robust in early 2018, the severe drought that hit the country will have a negative impact on agricultural production and exports. It is expected that next year the negative impact of the drought will be reversed.

In Brazil, real GDP is expected to grow at 2.3 percent in 2018, thanks to favorable external conditions and a rebound in private consumption and investment. The uptick in activity will lead to a moderate deterioration of the current account. A key risk, however, is that the policy agenda could change following the October presidential election, giving rise to market volatility and greater uncertainty about the medium-term outlook.

In Chile, economic activity is gaining momentum after a prolonged slowdown, benefiting from improved external conditions and domestic sentiment. Both mining and nonmining exports, as well as business investment, are leading the recovery, supported by solid household spending and slightly looser financial conditions.

In Colombia, policy easing and a favorable global environment will lift growth to 2.7 percent in 2018. A mildly expansionary fiscal policy, driven by stronger subnational government expenditure, along with the lagged effects of monetary policy easing in 2017, will support domestic demand. Investment is projected to increase strongly thanks to infrastructure projects, oil sector projects, and the 2016 tax reform.

Peru's government responded to the 2017 economic growth slowdown with countercyclical macro policies. These policies are expected to help economic growth rebound to around 3¾ percent in 2018, but downside risks associated with the Odebrecht investigation persist.

Venezuela's economic situation is worsening, with the economy contracting sharply for the fifth year in a row. The economy is expected to contract by 15 percent in 2018, following a cumulative 35 percent contraction over 2014–17. The humanitarian crisis is also intensifying with increasing scarcity of basic goods (for example, food, personal hygiene items, medicine), a collapse of the health system, and high crime rates. This has led to a sharp increase in emigration to neighboring countries.

The outlook for Central America, Panama, and the Dominican Republic (CAPDR) remains favorable and growth is expected to remain above potential for many countries in 2018, reflecting U.S. and global growth momentum.

Mexico's outlook is projected to benefit from higher growth in the United States as well as stronger domestic demand once uncertainty subsides about the outcome of the NAFTA renegotiation, the potential implications of the U.S. tax reform, and Mexico's July presidential election. Output growth is expected to accelerate from 2 percent in 2017 to 2.3 percent in 2018, supported by net exports and remittances.

Prospects for the Caribbean region are improving, with growth in both tourism-dependent economies and commodity exporters projected to be in the 1–2 percent range for 2018 and 2019.

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Earlier:

S.America
2018, May, 10, 13:00:00

PETROBRAS NET INCOME $2.145 BLN

PETROBRAS - Net income attributable to the shareholders of Petrobras was US$ 2,145 million in 1Q-2018, a 51% increase compared to US$ 1,417 million in 1Q-2017. The result improved mainly due to increase in Brent prices and gains with divestments.

S.America
2018, April, 25, 09:35:00

SHELL SELLS ARGENTINA $0.95 BLN

SHELL - Shell has signed an agreement to sell its Downstream business in Argentina to Raízen for US$0.95 billion in cash proceeds at completion, subject to customary closing conditions. The sale includes the Buenos Aires Refinery, around 645 retail stations, liquefied petroleum gas, marine fuels, aviation fuels, bitumen, chemicals and lubricants businesses, as well as supply and distribution activities in the country. Additionally, after the transaction closes, the businesses acquired by Raízen will continue their relationships with Shell through various commercial agreements, which represent an estimated value of US$0.3 billion.

S.America
2018, April, 13, 17:55:00

HARD OIL MARKET

BLOOMBERG - OPEC said its oil output fell to the lowest in a year last month amid reduced supplies from Venezuela and Saudi Arabia, suggesting global markets may tighten sharply later this year.

S.America
2018, March, 18, 11:30:00

BRAZIL REGAIN MARKET

PLATTS - "The increase in competition induced new practices in the market that resulted in imports returning to normal," Petrobras' Jorge Celestino said during a presentation of the company's 2017 financial results.

S.America
2018, March, 14, 11:15:00

VENEZUELA'S OIL PRODUCTION DOWN

EIA - Venezuela’s crude oil production has been on a downward trend for two decades, but it has experienced significant decreases over the past two years. Crude oil production in Venezuela decreased from 2.3 million barrels per day (b/d) in January 2016 to 1.6 million b/d in January 2018. A combination of relatively low global crude oil prices and the mismanagement of Venezuela’s oil industry has led to these accelerated declines in production.

 N.America
2018, February, 5, 07:42:00

MEXICO'S OIL INVESTMENT $100 BLN

FT - Mexico secured almost $100bn in investment in its most successful oil tender to date as Anglo-Dutch oil major Royal Dutch Shell positioned itself as the biggest player in deepwater exploration and new companies including Qatar Petroleum burst on to the scene.

 

 S.America
2018, January, 26, 12:05:00

RUSSIAN - ARGENTINIAN NUCLEAR

WNN - Russia and Argentina have signed a memorandum of understanding (MoU) on uranium exploration and mining in the South American country. Russian state nuclear corporation Rosatom is also proposing to supply Argentina with a nuclear power plant.

 

 

 

 

 

 

 

 

Tags: LATIN, AMERICA, GDP, ECONOMY, FINANCE

Chronicle:

LATIN AMERICA: LIMITING POTENTIAL
2018, December, 17, 10:15:00

QATAR'S LNG FOR PAKISTAN

TP - With fast growing demand and expanding gas receiving capacity in Pakistan, the South Asian nation is expected to source more liquefied natural gas (LNG) from Qatar, said the country’s visiting Finance Minister Asad Umar.

LATIN AMERICA: LIMITING POTENTIAL
2018, December, 17, 10:10:00

QATAR'S INVESTMENT FOR U.S.: $20 BLN

REUTERS - Qatar Petroleum (QP) is looking to invest at least $20 billion in the United States over the coming few years, its chief executive told Reuters, after the Gulf Arab state unexpectedly quit OPEC this month.

LATIN AMERICA: LIMITING POTENTIAL
2018, December, 17, 10:05:00

U.S. INDUSTRIAL PRODUCTION UP 0.6%

U.S. FRB - U.S. industrial production rose 0.6 percent in November after moving down 0.2 percent in October; the index for October was previously reported to have edged up 0.1 percent. In November, manufacturing production was unchanged, the output of mining increased 1.7 percent, and the index for utilities gained 3.3 percent.

LATIN AMERICA: LIMITING POTENTIAL
2018, December, 17, 10:00:00

U.S. RIGS DOWN 4 TO 1,071

BHGE - U.S. Rig Count is down 4 rigs from last week to 1,071, with oil rigs down 4 to 873 and gas rigs unchanged at 198. Canada Rig Count is down 12 rigs from last week to 174, with oil rigs down 7 to 95 and gas rigs down 5 to 79.

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