Economy, Finance and Trade in Latin America

November 2018

Latin America is the fourth largest economy in the world, with Brazil, Mexico, Argentina, Venezuela and Colombia the key economies. Over the 2012-2017 period, the region struggled with recessions in Brazil and Venezuela, currency devaluation in Argentina, and uncertainty over NAFTA in Mexico. By the end of 2017, Brazil showed signs of improvement with growth in private consumption, while Argentina will benefit from economic reforms.

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Key Findings

Most key economies recover from recession

Over 2012-2017, several key economies such as Brazil, Argentina and Venezuela faced economic crisis. By 2017, these economies (except Venezuela) saw slight improvement in private consumption with economic reforms and lower interest rates, which reflected positively on economic growth.

Venezuela continues to experience severe recession

Over the review period, low oil prices since mid-2014, along with economic mismanagement, caused a severe recession and hyperinflation in Venezuela. This resulted in the country’s drop from the fourth largest economy in Latin America in 2012 to the 15th largest by 2017.

Emigrants to the USA support remittance inflows in the region

In Latin America, a notable share of remittance inflows are received by Mexicans, Guatemalans and Dominicans, who are settled in the USA. In the coming years, the possibility of stricter immigration rules by the Trump Administration might negatively impact this trend.

North America is a key importer of Latin American products

Latin America’s exports to North America accounted for 46.3% of its overall goods exports in 2017. This is explained by the high volume of exports from Mexico to Canada and the USA, as a result of the North American Free Trade Agreement (NAFTA). However, with talks of NAFTA renegotiation doing the rounds, exports are likely to suffer and affect economic growth in the region. 

Introduction

Scope
Key findings

Regional Economic Overview

Key economies recover from recession except Venezuela
Financial intermediation and real estate is the largest sector
Latin America posts the slowest real GDP growth globally
Remittance inflows largely supported by emigrants to the USA
Latin America has the highest FDI intensity in world
Latin America posts highest inflation, distorted by Venezuela
Impact of an Emerging Market slowdown on the Brazilian economy
Impact of Trump adverse policies on the Mexican economy
Impact of a Latin American stagnation on the Colombian economy

Regional Trade Profile

Current account and trade deficits recorded in most countries
Latin America experiences trade growth after recession
North America dominates Latin America’s export profile

Regional Government Finances

Economic crisis adds to high share of public debt in Latin America
Government spending and revenue reduce in Mexico and Brazil

Country Snapshots

Brazil: e conomic structure and foreign investment overview
Brazil: inflation, exchange rates and export profile
Argentina: economic structure and foreign investment overview
Argentina: inflation , exchange rates and export profile
Chile: economic structure and foreign investment overview
Chile: inflation, exchange rates and export profile
Costa Rica: economic structure and foreign investment overview
Costa Rica: inflation, exchange rates and export profile
Colombia: economic structure and foreign investment overview
Colombia: inflation, exchange rates and export profile
Dominican Republic: economic structure and foreign investment overview
Dominican Republic: inflation, exchange rates and export profile
Guatemala: economic structure and foreign investment overview
Guatemala: inflation, exchange rates and export profile
Mexico: economic structure and foreign investment overview
Mexico: inflation, exchange rates and export profile
Ecuador: economic structure and foreign investment overview
Ecuador: inflation, exchange rates and export profile
Peru: economic structure and foreign investment overview
Peru: inflation, exchange rates and export profile
Venezuela: economic structure and foreign investment overview
Venezuela: inflation, exchange rates and export profile
Uruguay: economic structure and foreign investment overview
Uruguay: inflation, exchange rates and export profile
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