A global economic glimpse and the economic outlook for Latin America Orlando J. Ferreres Centro de Estudios Económicos Orlando J. Ferreres & Asociados
AGENDA World Economy: 2016/17 outlook Latin America: 2016/17 outlook Main indicators by country Trend of tourism in Latin America Conclusions
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
GDP growth % ECONOMIC GLOBAL GROWTH Developed Emerging Source: OJF & Asociados and IMF
Annual growth% - goods and services WORLD TRADE VOLUMES 15 13 11 9 7 5 3 1-1 -3-5 Developed Emerging Promedio Average 1990-2007 1990-2007 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: OJF & Asociados and IMF
GDP growth % EMERGING MARKETS GROWTH Source: OJF & Asociados and IMF
CHINA S COMMODITY CONSUMPTION As % of world consumption - 2014 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
INDEX January 2014=100 COMMODITY PRICES General Index Raw Materials Food related Metals Energy Source: OJF & Asociados and IMF
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
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
LATIN AMERICA AND THE CARIBBEAN MAIN LATIN AMERICA INDICATORS 2011 2012 2013 2014 2015 2016p 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
ARGENTINA ARGENTINA MAIN INDICATORS 2011 2012 2013 2014 2015 2016p 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
BRAZIL MAIN INDICATORS BRAZIL 2011 2012 2013 2014 2015 2016p 2017p 40878 41244 41609 41974 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
COLOMBIA MAIN INDICATORS COLOMBIA 2011 2012 2013 2014 2015 2016p 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 $/US$ 1.939 1.767 1.930 2.389 3.175 3.068 3.047 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
ECUADOR MAIN INDICATORS ECUADOR 2011 2012 2013 2014 2015 2016p 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
PERU MAIN INDICATORS PERU 2011 2012 2013 2014 2015 2016p 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
CHILE MAIN INDICATORS CHILE 2011 2012 2013 2014 2015 2016p 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 $/US$ 520 479 525 607 709 684 685 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
CUBA MAIN INDICATORS CUBA 2011 2012 2013 2014 2015 2016p 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
% annual change WORLD TOURIST ARRIVALS Avg 3,9% Source: UNWTO
WORLD TOURIST ARRIVALS Source: OJF & Asociados based upon worldbank database
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
THANK YOU! Centro de Estudios Económicos Orlando J. Ferreres & Asociados Economic Research, M&A and Financial Advisors www.ojf.com Buenos Aires, Argentina Tel: +54 11 4394-3993 cee@ojf.com