This report is prepared by IPDAL with sources from the IMF, the World Bank, the OECD, the IDB and ECLAC. The report ends with a comment from the President of the Institute.

Average growth of 3% in 2014 and 3.3% in 2015 for Latin America, according to the Inter-American Development Bank (IDB).

Slightly lower are the forecasts from the IMF, the World Bank and ECLAC, the Economic Commission for Latin America and the Caribbean, which are around 2.5% in 2014 and 3% in 2015.

The OECD places Mexico and Chile, along with South Korea, at the top of the countries that will record the greatest growth this year and in 2015.

In the reading carried out by the various organizations, it appears that in the case of the Inter-American Development Bank (IDB), the improvement of economic conditions in the United States and Europe is considered an important factor for additional growth potential in the region, especially Mexico. , Central America and the Caribbean, economies most closely linked to the United States.

However, the IDB’s Macroeconomic Study warns of two possible negative risks that the region could face: the financial impacts of a very rapid rise in interest rates in the United States and a reduction in the region’s real growth in the event of a slowdown. of China’s economic growth.

While it is a fact that the region’s economies are in a more solid position than they were in during the financial crises of the mid-1990s, most countries are in a weaker position than in 2007, before the Great Recession.

José Juan Ruiz, chief economist at the IDB, highlighted, during the presentation of the Study, that in the long term, “growth in Latin America will be around 3.5% against 4-4.5% in the world economy. The region will thus have a “performance median”.

The International Monetary Fund’s Global Economic Perspectives for the semester also consider that it will be the recovery of the most advanced economies that will have a positive impact on Latin American trade, but warns that this could be harmed by the decline in raw material prices.

Looking at country-by-country forecasts, the IMF reveals “considerable differences”:
– Panama with projected growth of 7.2% this year and 6.9 in 2015.
– The Caribbean with an average of 3.3% in both years.
– Mexico, with a Gross Domestic Product (GDP) reaching 3% this year and 3.5% in 2015, after weak growth of 1.1% in 2013. The growth prospects of the Mexican economy are the result of ongoing economic reforms, especially in the energy and telecommunications sectors.
– Colombia and Peru, countries with forecasts of accelerated pace of development with growth forecast for this year of 4.5% and 5.5%, respectively.
– Bolivia continues to grow above average with a projected growth of 5.1% for this year and 5% next.
– In Chile, moderation is expected with growth projected to be around 3.6% in 2014 but 4.1% in 2015.

The IMF emphasizes that the growth prospects for countries that export raw materials, such as Peru, Colombia, Chile and Bolivia, are quite solid.

The panorama in the largest economy in South America is different. Brazil will advance slowly, with expected growth of 1.8% in 2014 and 2.7% in 2015.
But the most marked slowdown will occur in Argentina and Venezuela.

The IMF predicts that Argentina will grow 0.5% this year and 1% in 2015.
On the contrary, for Venezuela a contraction of half a percentage point is expected in 2014 and 1% in 2015.

The World Bank (WB) recalls, along with other international organizations, that the region reached its economic peak during the last decade, thanks to the intense demand for the raw materials it produces, which helped to strengthen its finances, accumulate international reserves and lift thousands of Latin Americans out of poverty.

The BM adds that Latin American economies are less exposed to external shocks than in the past.

The health of its macroeconomy is better and foreign direct investment and remittances have diversified sources of financing for a region that previously depended on debt.

Also according to the World Bank, Peru’s economy is expected to expand by 5.5% and Colombia by just over 4%.
Bolivia, Guyana and Paraguay are also expected to grow above 4.5%.

The semi-annual forecasts from the Organization for Economic Cooperation and Development (OECD) place Mexico’s economy growing 3.4% in 2014, in line with the recovery in the United States. In 2015, the OECD predicts an increase in Mexican GDP of around 4.1%.

CEPAL, the Economic Commission for Latin America and the Caribbean, predicts great heterogeneity in growth levels:

Panama, Bolivia, Peru, Ecuador, Nicaragua and the Dominican Republic with growth equal to or greater than 5% in 2014, while an important number of countries will register growth between 3 and 5%.

For this organization, the activity indices in developed countries, especially the United States, the United Kingdom, South Korea and Germany, indicate a recovery but there is great caution regarding the situation in China, one of the region’s main trading partners which has imposed 7 % as a minimum growth target for this year.

On the other hand, it is expected that demand for basic products, especially mining and food, will remain limited or decrease, affecting economies that export these products, such as South America.

Sofia Vieira
Deputy Director of IPDAL

Commentary:

Latin America will continue to be a continent of opportunities.

With good economic dynamics, Latin American countries went through the last major global crisis with great determination and have exemplary growth rates and public debt.

The two largest economies, Brazil and Mexico – especially Mexico – present encouraging data, but not only: Also the Caribbean, Panama, Dominican Republic, Paraguay, and Ecuador. Small and medium-sized countries but where Portuguese companies, for their size and business characteristics, should be seen as generators of great opportunities.

IPDAL has mediated excellent business in these small and medium-sized countries, through several business missions with Portuguese companies interested in these markets.

The number of people who have risen to the consumer middle class is impressive, which translates into business opportunities for Portuguese exporting companies.

The Public Works and Construction plans in the vast majority of Latin American countries are also impressive, translating into business opportunities, we are talking about hundreds of thousands of euros.

The Portuguese businessman has the ideal profile to find local partners and promote joint business.

This is how opportunities in Latin America should be taken advantage of.

Paulo Neves
President of IPDAL