PERSPECTIVAS ECONÓMICAS PARA EL AÑO 2019

Transcription

1 PERSPECTIVAS ECONÓMICAS PARA EL AÑO 2019 Asamblea Annual FELABAN Noviembre 2018 Maria Paola Figueroa, Economista Senior, LATAM Research

2 Multiple Shocks Monetary policy normalization in the G-3. Trade & currency war with China (RMB deval). Geopolitical tensions, including Russia sanctions. Country-specific imbalances (Turkey & Argentina). Vulnerable Outliers Large FX overvaluations in Turkey and Argentina,... resulting in almost unprecedented real devaluations. Contagion Risk Record strong inflows to EM in recent years,... with positioning build-ups in certain economies: Colombia, Egypt, Indonesia, Lebanon, Peru, South Africa. 2

3 Private borrowing in Turkey, public in Argentina, wider c/a deficits in both. 3

4 Both countries will see GDP fall, Turkey should see sharper contraction. 4

5 Huge real devaluations, but from very different starting points. 5

6 The Lira is now significantly undervalued, the Peso is getting there. 6

7 Peak to trough contractions of 7-10 percent in Argentina and Turkey. 7

8 Recent years have seen portfolio flows to EM close to record strength. 8

9 Positioning build-ups in LBP, ZAR, EGP, IDR, COP, PEN. 9

10 The Fed is unlikely to be a bearish EM catalyst any time soon. 10

11 Another round of RMB devaluation more likely EM negative catalyst. 11

12 The region is leaving a long and painful recession behind. 12

13 Growth is set to remain moderate. Latin America: Real GDP growth %, y/y 8 Latin America Pacific Alliance Source: IIF

14 Reflecting divergences across countries LATAM Pacific Alliance Real GDP Growth (% y/y) Inflation (% oya, eop) Public Sector (% of GDP) Current Account (% of GDP) Source: IIF. 14

15 Monetary policy takes the lead 15

16 A sizable fiscal deficit is the main macro weakness Real GDP Growth (% y/y) Inflation (% oya) Public Sector Balance (% of GDP) Current Account Balance (% of GDP) Source: IIF. 16

17 However, external buffers are robust. 17

18 A faster recovery will require the implementation of reforms. 18

19 A sizable fiscal deficit is the main macro weakness 19

20 Subdued growth; high inflation Real GDP Growth (% y/y) Inflation (% oya) Public Sector Balance (% of GDP)* Current Account Balance (% of GDP)

21 Subdued growth; high inflation 10 % Pesos per $ 0 5 % GDP (Both Axes) 60 8 Inflation (Y/Y) % Change Policy Rate 5 4 Fiscal Deficit, % GDP 50 6 Exchange Rate, (rhs) 10 3 Public sector debt % GDP f 2019f 0 21

22 Impact of NAFTA has been significant 22

23 23

24 Collapse in oil production intensifies the crisis USD billion International reserves (excl. gold) USD billion Real GDP Growth (% y/y) Public external debt, rhs Inflation (% oya) Public Sector Balance (% of GDP) Current Account Balance (% of GDP) f Source: Haver, IIF 20 Source: IIF. 24

25 Oil production has collapsed. 25

26 Subdued growth due to weak confidence. Politics is the name of the game Policy Rate, % Peru Colombia Chile ene.-13 ene.-14 ene.-15 ene.-16 ene.-17 ene

27 Key challenge: advancing reforms. Ease of doing business, 2019 Rank (out of 190 countries) LatAm av erage OECD av erage Overall Starting a business Getting credit Pay ing taxes T rading across borders Enforcing contracts Resolv ing insolv ency Construction perm its Source: World Bank, IIF 27

28 against a difficult political backdrop. Perceptions of government and institutions 2,0 index ( )* index (1-7) 6 1,5 1,0 Institutional strength, rhs Perceptions of government 5 0,5 0,0 4-0,5-1,0-1,5 Correlation coefficient:.98 Arg Bra Chl Col Mex Per Ven U.S. Swe Gbr Fra 3 2 Source: World Bank, World Economic Forum, IIF; *above 0 is a positive perception 28