New areas of growth in Latin America
Juliana Machado / Infosurhoy
Paraguay and Panama are expected to register the strongest growth in the region, according to the ECLAC and the IMF.
The most recent forecasts by international organizations such as the International Monetary Fund (IMF) and the Economic Commission for Latin America and the Caribbean (ECLAC) have identified new areas of growth in Latin America.
Countries such as Chile, Colombia, Ecuador and Peru continue to register above-average rates of growth.
Peru is expected to maintain a growth rate of 6.3% in 2013, according to the IMF. ECLAC is forecasting a 6% increase in the gross domestic product (GDP) of Peru, which is ranked third among the region’s top growing countries.
Chile is expected to grow 4.9%, according to the IMF, and 5%, according to ECLAC, a slight drop from the 5.5% registered in 2012, but still above the regional average of 3.4%.
Ecuador also is expected to grow below the 5% rate it registered in 2012, though it is expected to continue to outperform the average, with a forecast rate of 4.4% for 2013, according to the IMF.
The projections also predict that Colombia will surpass Venezuela, with the IMF forecasting a 4.1% growth rate and the ECLAC forecasting 4.5%, up slightly from the 4% growth rate registered in 2012.
“If we were to look at the medium-sized economies, such as Peru, Colombia and Chile, and even some of the smaller ones, while leaving out large economies (Mexico, Brazil and Argentina), we would have an average growth rate for Latin America that was significantly higher than 3% or 4%,” said Paraguayan economic analyst Fernando Masi, the director of the Center for the Analysis and Promotion of the Paraguayan Economy (CADEP).
Paraguay is expected to make a considerable leap in 2013. After shrinking 1.2% in 2012, it’s expected to lead the regional ranking for 2013, with a 10% to 11% growth rate, according to the ECLAC and the IMF, respectively.
Masi said the performance of the Paraguayan economy is a repeat of the pattern in 2010, when the country’s GDP grew nearly 14%, after having decreased 4% in 2009.
Given its strong dependence on the agricultural sector, Paraguay’s economy is affected during the years in which there are climatic problems and instability in international prices, which was the case in 2009 and 2012. The following years, when these factors improved, the country resumed its growth pattern.
Another highlight is Panama, which grew 10.7% in 2012 and is expected to maintain its vigorous growth rate in 2013, with forecasts of 8% (ECLAC) and 9% (IMF).
Brazilian economist Silvio Campos Neto, of consulting firm Tendências Consultoria, said the growth map of Latin America shows “a clear differentiation” between two groups of economies.
The first, made up of countries such as Mexico, Peru, Colombia and Chile, follow transparent economic policies, with greater global insertion, which generates confidence among investors.
“On the other hand, there are countries such as Argentina and Venezuela, which continue to adopt policies that are unsustainable over the medium and long terms,” Campos Neto said.
The IMF is projecting growth of 2.8% for Argentina, up from 1.9% from last year. ECLAC expects the Argentine economy to grow 3.5%. Despite the recovery in relation to 2012, the country is facing problems related to high inflation and monetary instability, which have driven away investors.
Brazil and Mexico
The resumption of growth in Latin America in 2013 – forecast to come in at 3.4% by the IMF and 3.5% by ECLAC – will be largely driven by Brazil.
In 2012, the weak performance of the Brazilian economy, which grew only 0.9%, impacted other countries in the region, which had an overall growth rate of 3% for the year. For 2013, the IMF and ECLAC expect Brazil to register a 3% growth rate.
But there is uncertainty in Brazil, particularly due to the high rate of inflation, which is expected to reach 6.1% in 2013, according to the IMF, well above the 4.5% target set by the Brazilian Central Bank and very close to its 6.5% ceiling.
“It’s becoming increasingly clear that Brazil’s growth potential is much lower than what had been imaged until some time ago,” said Campos Neto, adding inflation has remained above the desirable level, even with the low growth.
The growth of another major economy in the region, Mexico, is expected to slow somewhat, to 3.4%, below the 3.9% registered in 2012, but above the expected performance of Brazil...
