Opportunities and Challenges for Latin America in 2014
According to international organizations and specialists in economic matters, even though economic expansion has begun to slow down, there are still bright spots in Latin America for 2014. Brazil and the countries of the Pacific Alliance are going to drive growth this year and will be helping mitigate the effects of changes in the economic matrixes of China, Europe and the US.
It is already known that the Latin American economy has been on the downturn since 2012 after a period of exceptional recovery stemmed from the 2008 global crisis. Still, international organizations, banks and economists alike, agree that this year will be reaping much higher benefits for investments and projects, compared with 2013. According to Consensus Economics a British consulting firm it is the countries of the Pacific Alliance and Brazil that will be improving the most.
Economic improvements in the United States and more demand coming from both North America and China will allow Mexico, Chile, Peru and Colombia to take the most benefit out of the situation. In the case of Brazil, the relationship with China and the effects of the World Cup will have their share of influence in the country’s overall results. On the other side, the firm states that Venezuela and Argentina and to a lesser extent other countries on the Bolivarian axis, will be hit by political instability, high levels of inflation and tightening of credit even from their staunchest allies
Brazil: protests and the World Cup
In 2013, the Brazilian GDP grew at a 2.3% after the awful 1% increase of 2012. Still, the government was shaken by protests that took out on the streets asking for a stronger hand on corruption and improvements to healthcare, transportation and education. President Dilma Rousseff heard the noise, and started implementing a series of changes inside her cabinet, and pumped new money into the Brazilian states for major construction projects. These investment ideas, coupled with the upcoming World Cup and works for the 2016 Summer Olympics should keep the country on its way to strengthen its role as the largest economy of the region.
Standard Chartered the London based bank, is the one that sees the most positive numbers, forecasting an expansion of 3.5%, while Citigroup on the other corner is only aiming for a 1.8%. Other groups, including CEPAL and the CAF (both Latin American thinktanks) forecasted 2.6% and 3.2% respectively. Inflation, the negative side of Brazilian’s growth, reached 5.6% in 2013 and could get to 6% this year, according to private sources as the economy keeps relying heavily on its sale of raw materials to the Chinese economy. Calls for innovation though, have been made and plans are already underway to attract foreign workforce in order to solidify the country’s talent base for the future.