A global economic glimpse and the economic outlook for Latin America

Transcription

1 A global economic glimpse and the economic outlook for Latin America Orlando J. Ferreres Centro de Estudios Económicos Orlando J. Ferreres & Asociados

2 AGENDA World Economy: 2016/17 outlook Latin America: 2016/17 outlook Main indicators by country Trend of tourism in Latin America Conclusions

3 WORLD ECONOMY 2016/2017 World economic growth will continue to be unexceptional. Volume of commerce (goods and services) is growing under the historical trend. China is slowing down Commodity prices are lower than 3 years ago However, very low interest rates and global liquidity are placing a floor to commodities downfall

4 GDP growth % ECONOMIC GLOBAL GROWTH Developed Emerging Source: OJF & Asociados and IMF

5 Annual growth% - goods and services WORLD TRADE VOLUMES Developed Emerging Promedio Average Source: OJF & Asociados and IMF

6 GDP growth % EMERGING MARKETS GROWTH Source: OJF & Asociados and IMF

7 CHINA S COMMODITY CONSUMPTION As % of world consumption and 1S-15 54% 50% 48% 46% 46% 45% 40% 31% 30% 30% 28% 23% 22% 17% 12% 11% 10% 6% 5% Aluminum Nickel Cooper Zinc Tin Steel Lead Cotton Rice Soy. Oil Soy. Meal Gold Corn Wheat Crude Oil Sorghum Sugar Nat. Gas Barley Source: OJF & Asociados based on The Wall Street Journal

8 INDEX January 2014=100 COMMODITY PRICES General Index Raw Materials Food related Metals Energy Source: OJF & Asociados and IMF

9 5,5% 5,0% 4,5% 4,0% 3,5% 3,0% 2,5% 2,0% 1,5% 1,0% 0,5% 0,0% May.-04 Dic.-04 INTERNATIONAL INTEREST RATES Federal En % reserve anual target interest rate (Annual rate) Jul.-05 Feb.-06 Source: OJF & Associates Sept.-06 Abr.-07 Nov.-07 Jun.-08 Ene.-09 Ago.-09 Mar.-10 Oct.-10 May.-11 Dic.-11 Jul.-12 Feb.-13 Sept.-13 Abr.-14 Nov.-14 Jun.-15 Ene.-16 Ago.-16 Mar.-17 Oct.-17

10 LATIN AMERICA ENVIRONMENT 2016/2017 Latin America economy will perform better in 2017 The 2 biggest economies in South America will perform better Argentina GDP will grow 3,7% next year Brazil may show a mild recovery in 2017 Colombia, Perú and Chile will also perform better Economic Growth will be better Inflation will slow down Local currencies may show some soft appreciation next year, however exchange rate will still be higher than 2014 Ecuador: Low oil prices and reconstruction costs after the earthquake in Esmeraldas will keep GDP growth in negative figures

11 LATIN AMERICA AND THE CARIBBEAN MAIN LATIN AMERICA INDICATORS p 2017p ECONOMIC GROWTH, Ann. % chg. 4,3 3,0 2,9 0,8 0,0-0,5 2,0 INFLATION RATE, Ann. % chg. 5,3 4,4 4,5 5,0 6,2 5,0 4,2 FISCAL BALANCE, % GDP -2,1-2,7-2,9-5,3-6,9-6,7-6,2 CURRENT ACCOUNT, % GDP -1,4-1,8-2,6-2,9-3,3-2,3-2,1 Source: OJF based on Latin Focus

12 ARGENTINA ARGENTINA MAIN INDICATORS p 2017p ECONOMIC GROWTH, Ann. % chg. 4,9-0,5 3,5-2,7 2,0-1,2 3,7 INFLATION RATE, Ann. % chg. 23,3 23,0 29,7 38,3 27,8 40,6 26,3 EXCHANGE RATE, End of period $/US$ 4,3 4,9 6,3 8,6 11,3 16,2 19,3 FISCAL BALANCE, % GDP -2,1-2,8-3,5-5,0-6,3-4,4-2,9 CURRENT ACCOUNT, % GDP -0,8-0,2-0,9-1,7-3,0-3,3-3,6 Source: OJF & Asociados

13 BRAZIL MAIN INDICATORS BRAZIL p 2017p ECONOMIC GROWTH, Ann. % chg. 4,2 1,9 3,0 0,1-3,8-3,2 1,0-3,0 INFLATION RATE, Ann. % chg. 6,5 5,8 5,9 6,4 10,7 7,3 5,1 EXCHANGE RATE, End of period $R/US$ 1,9 2,0 2,4 2,7 4,0 3,4 3,6 FISCAL BALANCE, % GDP -2,5-2,0-3,0-6,0-10,4-9,5-8,7 CURRENT ACCOUNT, % GDP -2,1-2,4-3,6-4,2-3,3-1,1-1,2 Source: OJF based on Latin Focus

14 COLOMBIA MAIN INDICATORS COLOMBIA p 2017p ECONOMIC GROWTH, Ann. % chg. 6,6 4,0 4,9 4,4 3,1 2,2 2,8 INFLATION RATE, Ann. % chg. 3,7 2,4 1,9 3,7 6,8 6,7 4,1 EXCHANGE RATE, End of period $/US$ FISCAL BALANCE, % GDP -2,0-1,9-2,2-2,6-3,1-3,9-3,4 CURRENT ACCOUNT, % GDP -2,9-3,1-3,3-5,1-6,4-5,3-4,6 Source: OJF & Asociados based on Latin Focus

15 ECUADOR MAIN INDICATORS ECUADOR p 2017p ECONOMIC GROWTH, Ann. % chg. 7,9 5,6 4,6 3,7 0,2-2,8-0,2 INFLATION RATE, Ann. % chg. 5,4 4,2 2,7 3,7 3,4 2,2 2,8 EXCHANGE RATE, End of period $/US$ 1,0 1,0 1,0 1,0 1,0 1,0 1,0 FISCAL BALANCE, % GDP -0,1-0,9-4,6-5,3-5,3-4,2-3,6 CURRENT ACCOUNT, % GDP -0,5-0,2-1,0-0,5-2,1-1,4-1,0 Source: OJF & Asociados en base a Latin Focus

16 PERU MAIN INDICATORS PERU p 2017p ECONOMIC GROWTH, Ann. % chg. 6,5 6,0 5,8 2,4 3,3 3,7 4,2 INFLATION RATE, Ann. % chg. 4,7 2,7 2,9 3,2 4,4 2,9 2,7 EXCHANGE RATE, End of period $/US$ 2,7 2,6 2,8 3,0 3,4 3,4 3,5 FISCAL BALANCE, % GDP 2,0 2,3 0,9-0,3-2,1-2,8-2,6 CURRENT ACCOUNT, % GDP -1,9-2,7-4,2-4,0-4,8-3,6-3,0 Source: OJF based on Latin Focus

17 CHILE MAIN INDICATORS CHILE p 2017p ECONOMIC GROWTH, Ann. % chg. 5,8 5,5 4,0 1,9 2,3 1,7 2,2 INFLATION RATE, Ann. % chg. 4,4 1,5 3,0 4,6 4,4 3,6 3,0 EXCHANGE RATE, End of period $/US$ FISCAL BALANCE, % GDP 1,5 0,6-0,6-1,6-2,2-2,7-2,6 CURRENT ACCOUNT, % GDP -1,2-3,5-3,7-1,3-2,0-1,9-1,9 Source: OJF based on Latin Focus

18 CUBA MAIN INDICATORS CUBA p 2017p ECONOMIC GROWTH, Ann. % chg. 2,8 3,0 2,7 1,3 4,3 4,0 4,5 INFLATION RATE, Ann. % chg. 4,8 5,5 6,0 5,3 4,4 3,7 3,3 EXCHANGE RATE, End of period $/US$ 1,0 1,0 1,0 1,0 1,0 1,0 1,0 FISCAL BALANCE, % GDP -1,7-3,6-1,3-2,2-5,7-7,2-7,0 CURRENT ACCOUNT, % GDP 2,1-0,4-1,4 2,4 0,1 0,1 0,1 Source: OJF & Asociados based upon Trading Economics

19 % annual change WORLD TOURIST ARRIVALS Avg 3,9% Source: UNWTO

20 WORLD TOURIST ARRIVALS Source: OJF & Asociados based upon worldbank database

21 Conclusion World Economy will perform slightly better 2017 Developed economy will continue with expansionary monetary policy China s GDP will grow at a 6% annual rate Latin America economy may grow at a stronger pace as Brazil and Argentina Commodity prices won t go up Demand for commodities is slowing down Low interest rates established a floor for this products International tourism will grow close to the 3,9% historical avg. Weaker currencies and sporting events (World Cup and the Olympics) let the region increase its share of global tourist arrivals in the past few years This will be difficult to sustain in 2017

22 THANK YOU! Centro de Estudios Económicos Orlando J. Ferreres & Asociados Economic Research, M&A and Financial Advisors Buenos Aires, Argentina Tel: