The World Economic Crisis and its Impact on Latin Americaaapa.files.cms-plus.com/SeminarPresentations/2009Seminars... · Impact on Latin America Rafael Amiel Managing Director, Latin

The World Economic Crisis and its The World Economic Crisis and its

Impact on Latin AmericaImpact on Latin America

Rafael Amiel

Managing Director, Latin America

February 3, 2009

2

Copyright © 2009 IHS Global Insight. All Rights Reserved.

The Worst Global Recession in Six Decades

• Globalization has increased business-cycle synchronization

• North America, Europe, and Japan are facing severe downturns

• Growth in emerging markets will slow dramatically

• A Great Depression or Japan-style lost decade is unlikely

• Huge fiscal and monetary stimuli will help to spark recovery

• Bottom Line: a deep recession in 2009, modest recovery in 2010, and a stronger rebound in 2011

3


(Annual percent change, 2000 dollars) (Percent)

U.S. Expected To Contract by 2.5% in 2009

-6

-4

-2

0

2

4

6

8

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

3

4

5

6

7

8

9

10

Real GDP Growth Unemployment Rate

4


(Index, over 50 indicates expansion)

30

35

40

45

50

55

60

65

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

United States Eurozone China

Purchasing Manager Indexes for Manufacturing Signal a Severe Global Downturn

5


-4

-2

0

2

4

6

8

1980 1984 1988 1992 1996 2000 2004 2008 2012

Real GDP Industrial Production

(Percent change)

The World Economy Faces the Worst Recession of the Postwar Era

6


-2

0

2

4

6

8

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Advanced Countries Emerging Markets Developing Countries

(Real GDP, percent change)

It’s Still a Two-Speed World Economy

7


-4

-2

0

2

4

6

8

10

NAFTA WesternEurope

Japan OtherAmericas

EmergingEurope

Mideast-N. Africa

Sub-Saharan

Africa

OtherAsia-

Pacific

2007 2008 2009 2010

(Real GDP, percent change)

Wide Variations in Regional Economic Growth

8


-8

-4

0

4

8

12

NAFTA Western

Europe

Japan Other

Americas

Emerging

Europe

Mideast-

N. Africa

Sub-

Saharan

Africa

Other

Asia-

Pacific

2007 2008 2009 2010

(Percent change)

Industrial Production Is Declining in Many Regions

9


The Financial Crisis: Big, Bad, Broadly Based

• Perhaps the biggest global housing & credit bubble in history

• Credit growth was strong everywhere

• Bank loan/deposit ratios were especially high in Europe

• U.S. subprime mortgage crisis was the first symptom

• Driving forces: loose monetary policies, financial innovation, deregulation, globalization, government policies favoring debt

• No region will be unscathed

10


Bubbles Are Bursting Around the World

Commercial Real Estate

HousingHousing Commercial Real Estate

Commercial Real Estate

CommoditiesCommodities

CurrenciesCurrencies

EquitiesEquities

11


-75 -50 -25 0 25 50 75 100 125 150

United Kingdom (FTSE 100)

Canada (S&P TSX)

United States (S&P 500)

Japan (Nikkei 225)

World, Developed* (MSCI)

Eurozone (FTSE Euro 100)

Emerging Markets* (MSCI)

China (SSEA)

2006 2007 2008

(Percent change, local currencies)

* In U.S. Dollars

A Global Stock Market Correction in 2008

12


Lessons from Past Financial Crises

• Financial crises are “hardy perennials”

• The worst crises have occurred in heavily regulated systems

• Deflation is a bigger threat than inflation

• There are limits to crisis management; system solutions are needed—sooner rather than later

• Key ingredients of a successful fix: ample liquidity, capital infusions, deposit insurance, debt guarantees, fiscal stimulus

13


0

1

2

3

4

5

6

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

United States Eurozone Japan United Kingdom

(Percent)

Policy Interest Rates Are Dropping

14


Long-Term Government Bond Yields Are Low

0

2

4

6

8

10

12

14

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

United States Germany Japan

(10-year government bond yields, percent)

15


-9

-6

-3

0

3

6

9

NAFTA WesternEurope

Japan OtherAmericas

EmergingEurope

Mideast-N. Africa

Sub-Saharan

Africa

OtherAsia-

Pacific

2007 2008 2009 2010

(Federal budget balance, % of GDP)

Fiscal Balances Will Deteriorate Across Regions

16


Forces That Drove Up Commodity Prices

• Strong economic growth in emerging markets

• Stimulative monetary policies

• Lagging supply responses to higher prices

• Government subsidies—being removed slowly

• Export restrictions

• U.S. dollar depreciation

• Speculation

17


0

20

40

60

80

100

120

140

1998 2000 2002 2004 2006 2008 2010 2012

(West Texas Intermediate price, dollars per barrel)

A Sharp Retreat in Crude Oil Prices

18


Oil Prices Are Still a Risk

• Additions to supply continue to disappoint

• Lower prices are discouraging development

• Periodic supply disruptions, geopolitical events, and speculation contribute to price volatility

• Long-term growth in emerging markets will be strong

• The world has abundant energy resources, but they are concentrated in high-risk countries

19


0

1

2

3

4

5

6

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

All Materials Chemicals Nonferrous Metals

(IHS Global Insight Indexes, 2002:1=1.0)

And A Swift Correction in Industrial Materials Prices

20


6.2-9.6-3.12.2Imports

-0.9-7.06.48.4Exports

2.90.41.22.3State & Local Govt.

1.51.42.82.1Federal Government

-0.3-15.11.94.9Bus. Fixed Investment

15.2-20.8-21.0-17.9Residential Investment

2.3-0.90.32.8Consumption

2.2-2.51.22.0Real GDP

2010200920082007

(Percent change)

U.S. Economic Growth by Sector

21


-9

-6

-3

0

3

6

9

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012


(Percent change)

U.S. Real GDP and Industrial Production Growth

22


Global Economic Crisis: Contagion in LATAM

• The combination of a deep U.S. recession and the global financial crisis will impose severe damage to the Latin American economies.

• U.S. and global recession affect Latin America and Caribbean:

• Trade: lower demand for LATAM exports, lower employment in manufacturing sector

• Capital: credit tightening, higher interest rates, lower foreign direct investment, capital outflows, flight to quality

• Lower remittances

23


Global Economic Crisis: Contagion in LATAM

• Lower oil prices is good news for the large majority of countries in the region, but not all. It will help external and fiscal accounts and price stability.

• Inflation: external pressures vanish with lower commodity prices. This will give some relief to fiscal accounts, as subsidies may be ended.

• Exchange rate corrections may continue as external deficits widen.

24


Latin America

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2004 2006 2008 2010 2012 2014

-20.0

-10.0

0.0

10.0

20.0

30.0

2004 2006 2008 2010 2012 2014

-4.0

-2.0

0.0

2.0

4.0

2004 2006 2008 2010 2012 2014

GDP GrowthGDP GrowthExports Exports

Current Account BalanceCurrent Account Balance InflationInflation

(y/y in percent)(growth nominal terms y/y in percent)

(percent of GDP) (y/y in percent)

0.0

2.0

4.0

6.0

8.0

10.0

2004 2008 2012

25


Latin America: A Temporary Setback

• Exports are falling in response to global slowdown

• Lower commodity prices will hurt several countries

• Currencies are under pressure as investors avoid risk

• But compared with the late 1990s, the region is better shielded from the global financial crisis

• Long-term prospects are bright for countries attracting foreign investment, including Brazil, Chile, Peru, Panama and Colombia

• Policy mismanagement and resource nationalism will take a toll on Argentina, Venezuela, Bolivia, and Ecuador

26


Devaluations Bring Down Nominal US$ GDP

0

1000

2000

3000

4000

5000

6000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

0

1500

3000

4500

6000

7500

9000

Nominal GDP (US$, billions) GDP Per Capita (US$, right axis)

27


-3

0

3

6

9

12

15

18

GDP Private

Consumption

Government

Consumption

Fixed

Investment

Exports

2003 2004 2005 2006 2007

(Percent change, 2000 dollars)

In the last tranche of the cycle, investment was the major driver of growth

28


Higher perception of risk and cost of funding: Argentina and Venezuela push up the average

Interest Rates, percent

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

Sep-99 Jul-00 May-01 Mar-02 Jan-03 Dec-03 Oct-04 Aug-05 Jun-06 May-07 Mar-08 Jan-09

Embi+ Embi+ Latin America US 10- year Treasury Bonds Embi+ México

29


Improved Fiscal Accounts

2.3-0.3-2.3-3.2Peru

-0.0-0.1-1.0-1.0Mexico

0.8-1.6-2.7-2.7Panama

-0.80.0-3.6-5.5Colombia

6.35.2-0.9-1.3Chile

3.80.6-1.20.7Venezuela

1.81.8-1.4-1.6Argentina

-1.5-3.0-4.1-5.3Brazil

2008200520021999(Percent of GDP)

30


The Inflation threat has Vanished, but not for all

3.65.81.82.0Peru

3.85.14.03.6Mexico

6.79.04.22.1Panama

5.77.05.54.3Colombia

4.08.74.43.4Chile

18.531.318.713.7Venezuela

8.98.98.810.9Argentina

4.75.73.64.2Brazil

2009200820072006CPI Percent Change

31


Exchange Rates: Overshooting? … not yet, maybe Mexico

50

60

70

80

90

100

110

Jun-04 Mar-05 Dec-05 Sep-06 Jul-07 Apr-08 Jan-09

Brazil Chile Colombia

Uruguay Peru

Exchange Rates(June 2004=100)

80859095

100105110115120125

Jun-04 Mar-05 Dec-05 Sep-06 Jul-07 Apr-08 Jan-09

Argentina Mexico

Exchange Rates(June 2004=100)

32


Enhanced Debt Profile: Total Debt as percent of GDP declined substantially

0

10

20

30

40

50

60

1999 2001 2003 2005 2007 2009

0

200

400

600

800

1000

1200

as % of GDP (left scale) in US$ Billions (right scale)

Latin America & Caribbean: Total Foreign Debt

`

33


Enhanced Debt Profile: Debt Service unchanged in nominal terms but significantly lower compared to exports

0

60

120

180

240

1999 2001 2003 2005 2007 2009

0

10

20

30

40

50

60

in US$ Billions (left scale)

as % of Exports (right scale)

Latin America & Caribbean: Debt Service

34


Enhanced Debt Profile: A sizeable cushion of International Reserves

0

100

200

300

400

500

600

1999 2001 2003 2005 2007 2009

0

10

20

30

40

50

60

in US$ Billions (left scale) as % of Debt (right scale)

Latin America & C: Foreign Exchange Reserves

35


Will the Region remain attractive for foreign investors?

0

25

50

75

100

125

1999 2001 2003 2005 2007 2009

Latin America & C.: Foreign Direct Investment(U.S $ Billions)

36


External accounts are back to negative territory but partially financed by FDI

-120

-100

-80

-60

-40-20

0

20

40

60

1999 2001 2003 2005 2007 2009

LATAM & C: External Balance: Current Account(U.S $ Billions)

37


Stock Market Correction

0

100

200

300

400

500

Feb-01 May-02 Sep-03 Jan-05 Apr-06 Aug-07 Dec-08

Brazil Mexico Argentina Chile

Stock Markets(Jan 2001 = 100)

0

500

1000

1500

2000

Feb-01 May-02 Sep-03 Jan-05 Apr-06 Aug-07 Dec-08

Colombia Peru

Stock Markets(Jan 2001 = 100)

38


Slow down all across the region

6.13.79.28.9Peru

2.3-2.31.33.2Mexico

3.51.04.05.4Latin America & Caribbean

4.01.53.57.6Colombia

4.62.43.75.1Chile

3.21.65.68.4Venezuela

3.61.05.68.6Argentina

4.01.55.15.7Brazil

2010200920082007GDP Percent Change

39


Final Remarks

• The region is set for a sharp deceleration, although risks differ across countries

• Latin American economies are better prepared for external shocks, however a severity of the US crisis will bring some countries into recession too

• External inflationary pressures are fading with correction in commodity prices

• Under the assumption that commodity prices will not drop substantially from current levels, external and fiscal imbalances will be manageable

40


Final Remarks

• The region should recover in 2010 in line with improved US and world economic conditions, but growth rates are expected to be moderate

• Venezuela, Argentina and Ecuador may have to deal first with macroeconomic mismanagement

• Under the assumption that commodity prices will not drop substantially from current levels, external and fiscal imbalances will be manageable

Thank you!Thank you!

Rafael Amiel


[email protected]

610.490.2723

42


Mexico’s Economy Chilled by U.S. Recession

• Manufacturing and remittances are adversely affected by the U.S. recession

• Monetary policy makes a U-Turn

• Fiscal policy is expansionary

• Currency adjustments have improved competitiveness

• Declining oil production is a problem

• More structural reforms are needed

43


-6

-4

-2

0

2

4

6

8

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Mexico United States

(Percent change, real GDP)

A Downturn in Mexico’s Economy

44


-8

-4

0

4

8

12

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012


(Percent change)

A Downturn in Mexico’s Economy

45


*Annual average, **Billions of U.S. dollars

-50

-40

-30

-20

-10

0

2000 2002 2004 2006 2008 2010 20128

10

12

14

16

2000 2002 2004 2006 2008 2010 2012

-3

0

3

6

9

2000 2002 2004 2006 2008 2010 2012

Real GDP Growth (%) Consumer Price Inflation (%)

Exchange Rate per US$* Current Account Balance**

0

2

4

6

8

10

2000 2002 2004 2006 2008 2010 2012

Mexico Outlook Summary

46


Mexico’s Real Economic Growth by Sector

4.6-1.47.97.1Imports

4.3-3.21.86.2Exports

1.92.30.61.0Government Consumption

3.1-3.55.15.6Fixed Investment

1.91.33.14.2Private Consumption

2.3-2.31.33.2Real GDP

2010200920082007

(Percent change)

47


Brazil’s Economy Faces Competitive Challenges

• The engines of growth—business investment and exports—have slowed abruptly

• Sound monetary policies have kept inflation low, but interest rates are still very high

• The global financial crisis has put downward pressure on the real’s exchange rate, correcting an overvaluation

• Competitiveness is undermined by high and complex taxation, heavy bureaucracy, and insufficient infrastructure investment

48


Brazil Outlook Summary


-40-30-20-10

01020

2000 2002 2004 2006 2008 2010 2012

1.5

2.0

2.5

3.0

3.5

2000 2002 2004 2006 2008 2010 2012

0

2

4

6

2000 2002 2004 2006 2008 2010 2012



0

4

8

12

16

2000 2002 2004 2006 2008 2010 2012

49


5.49.020.420.8Imports

6.82.13.06.7Exports


5.66.017.513.5Fixed Investment


4.01.85.15.7Real GDP

2010200920082007

(Percent change)

Brazil’s Real Economic Growth by Sector

50


Chile’s Solid Fundamentals Payoff During Crisis

• Chile’s Economy is well positioned to weather the current crisis:

�Low level of public debt (below 5% of GDP),

�US$ 50 billion in sovereign wealth funds and foreign reserves

�Countercyclical fiscal policy and prudent monetary policy

�Financial system with minimal exposure to global credit crisis

• The global financial crisis has put downward pressure on the peso’s exchange rate, mainly through less favorable terms of trade.

• The Chilean economy should resume a higher growth rate in 2010 as local demand and exports recover from the crisis.

• Annual inflation will converge to the 2-4% target zone by mid-2009

51


Chile Outlook Summary

0

1

2

3

4

5

6

2000 2002 2004 2006 2008 2010 2012

0

2

4

6

8

2000 2002 2004 2006 2008 2010 2012

450

550

650

750

2000 2002 2004 2006 2008 2010 2012




-5

-2

2

6

9

2000 2002 2004 2006 2008 2010 2012

52


6.72.415.114.3Imports

7.40.21.37.7Exports




4.62.43.75.1Real GDP

2010200920082007

(Percent change)

Chile’s Real Economic Growth by Sector

53


Argentina’s Economy Faces Local and External Shocks

• Lower commodity prices will test external and public accounts

• Severe drought is affecting the agriculture sector

• Debt service secured in 2009 thanks to retirement funds

• Manipulation of inflation statistics continues, but inflation isdecelerating

• Fiscal balances continues to deteriorate. 2009 is an electoral year

• Deteriorating consumer confidence will contain household expenditure

54


Argentina: Surviving the 8-year economic cycle

-15

-10

-5

0

5

10

15

20

1990 1993 1996 1999 2002 2005 2008 2011


(Percent change)

55


0

1

2

3

4

5

2000 2002 2004 2006 2008 2010 2012

Exchange Rate per US$**

Inflation (%)

-10

0

10

20

30

40

2000 2002 2004 2006 2008 2010 2012

CPI GDP Def lator

-10

-5

0

5

10

15

2000 2002 2004 2006 2008 2010 2012

Current Account Balance***

-4

-3

-2

-1

0

1

2

3

2000 2002 2004 2006 2008 2010 2012

Fiscal Balance*

*As % of GDP. **End of period, ***Billions of U.S. dollars

Argentina Outlook Summary

56


Argentina’s Real Economic Growth by Sector

5.8-3.317.420.5Imports

3.0-4.55.09.1Exports




3.61.05.68.6Real GDP

2010200920082007

57


Colombia’s Private Sector will Drag Economic Growth

• Monetary easing started rather late due to inflation resilience

• Limited maneuver space for fiscal expansion. The government is, in fact, cutting expenditures.

• Exporters are recovering some competitiveness thanks to a weaker peso

• Increasing unemployment and ponzi-schemes recently discovered affect consumer confidence

• Lower FDI will make it difficult to finance the current account deficit

58


A Downturn in Colombia’s Economy

-6

-4

-2

0

2

4

6

8

1990 1993 1996 1999 2002 2005 2008 2011

Colombia United States

(Percent change, real GDP)

59


Colombia Outlook Summary

0

2

4

6

8

10

2000 2002 2004 2006 2008 2010 2012

Inflation (%)

-8

-6

-4

-2

0

2

2000 2002 2004 2006 2008 2010 2012

Current Account Balance***

1800

2100

2400

2700

3000

2000 2002 2004 2006 2008 2010 2012

Exchange Rate per US$**

-8

-6

-4

-2

0

2000 2002 2004 2006 2008 2010 2012

Fiscal Balance*

*As % of GDP. **End of period, ***Billions of U.S. dollars

60


Colombia’s Real Economic Growth by Sector

7.31.48.013.9Imports

6.60.05.511.4Exports




4.01.53.57.6Real GDP

2010200920082007

61


Venezuela and the Oil Bust

(year-on-year percentage change)

6.5

9.7

6.1

0.3

-2.4

4.0

-0.2

6.4

0.3

-6.0

3.7 3.4

-8.9-7.8

10.4

8.4

5.6

1.7

3.23.7 3.8

18.3

10.3

-15

-10

-5

0

5

10

15

20

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Coup attempt, Oil strike

Coup attempt, Oil strike

Oil production drops 9.1%

Oil production drops 9.1%

Oil Price SlumpsOil Price Slumps

62


Overdependence on Oil and Macroeconomic Mismanagement

• Chavez will redirect resources towards the domestic economy, Petro-Diplomacy will take a back seat during the oil price slump.

• New taxes and VAT tax rate raises already in the pipe.

• Risk of Devaluation of local currency, 35%-45% in 2009

• Inflation is still a problem.

• Myopic Short-Term Planning => Market Distortions:

• Price Controls on Food Items and Essentials

• Foreign Exchange Controls, inefficiencies in the system

• Capital Controls

• Arbitrary Import Quotas, Higher Tariffs, on Selected Items

• Import Subsidies on Food Items

63


Show me the Money

US$27.7 billionDeposits Abroad

US$12.3 billionPortfolio Investments

US$22.9 billion

Accounts Receivables (credit lines to other countries/foreign enterprises)

US$16 billionFonden (Development Fund, unallocated funds)

US$0.8 billionFEM (Macroeconomic Stabilization Fund)

US$28.7 billionInternational Reserves

US$83.1 billionVenezuela’s Net Public Sector Assets (as of January 2009)

US$30.8 billionRevenues needed from the rest of the economy

US$5.7 billionNew Debt to issue, approved in budget

US$22.9 billion

IHS Global Insight’s Estimated Fiscal Revenues from Oil Sector (WTI price of US$37

per barrel)

US$59.4 billion2009 Fiscal Budget

64


Venezuela Outlook Summary


-20-10

010203040

2000 2002 2004 2006 2008 2010 2012

0.0

1.0

2.0

3.0

4.0

5.0

2000 2002 2004 2006 2008 2010 2012

-15-10

-505

101520

2000 2003 2006 2009 2012



0

10

20

30

40

2000 2002 2004 2006 2008 2010 2012

65


8.34.95.933.6Imports

2.4-3.5-0.6-5.6Exports

-0.44.66.55.1Government Consumption



3.21.65.68.4Real GDP

2010200920082007

(Percent change)

Venezuela’s Real Economic Growth by Sector

PanamaPanama

Country Overview

67


Macroeconomic Fundamentals

• While many world economies struggle to keep afloat, Panama posted a 9.2% year-on-year GDP growth in the third quarter of 2008.

• Construction, the Panama Canal, and the Colon Free-Trade Zone are the drivers of growth.

• The Negatives:

• The global trade slowdown expected for 2009 will affect two of the main drivers of growth. Exports to the United States account for 34% of the total.

• They artificially fuel the construction boom, but will also raise the risk of a real estate bubble burst in Panama

• The Positives:

• Panama's authorities and the Panama Canal authority have secured more than 50% of the funds needed to build the Canal's expansion project.

• Panama's on-course fiscal performance should help the country in building a good reputation on the external markets and gain access to external financing.

68


Sluggish Economic Growth in 2009

(percent, change year-over-year)

-3

0

3

6

9

12

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

-3

0

3

6

9

12

Panama USA

Global EconomicSlowdown

Global EconomicSlowdown

Panama Canal Extension Project, third locks

Panama Canal Extension Project, third locks

Tax incentives keep construction boom going

Tax incentives keep construction boom going

69


Strong Growth in GDP per Capita

1314

1617

20

24

26

29

31

35

39

0

5

10

15

20

25

30

35

40

45

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Nominal GDP (US$, billions) GDP Per Capita (US$, right axis)

70


More Moderate Growth in Disposable Income

1112

1314

17

19

21

23

25

28

31

0

5

10

15

20

25

30

35

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Disposable Income (US$, billions) Disposable Income Per Capita (US$, right axis)

Median household income in 2004: US$4,800

Median household income in 2004: US$4,800

71


Stable Local Currency

• Local currency pegged to the U.S. dollar is a double-edge sword.

• The annual inflation rate should reflect the impact of strong economic growth in the last stage of the Canal extension program.

Annual Average Exchange Rate

0.8

1

1.2

1.4

1.6

1.8

2

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Balboas/US$ Balboas/Euro

Balboa pegged to US$ one-to-one

Balboa pegged to US$ one-to-one

Annual Inflation Rate(percentage)

0

2

4

6

8

10

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

72


Population Growth is Decelerating

• Total population estimated at 3.3 million in 2007• 49.6% Female

• Aging population• Share of individuals aged 14 to 44 drops from 48.1% in 2003 to 46.4% in

2013

• Share of individuals aged 45 to 64 increases from 15.1% in 2003 to 18.5% in 2013

• Increasing participation rate in the labor force, declining unemployment rate, declining share of employment in the informalsector

Population Growth Rate(percentage)

0.0

0.5

1.0

1.5

2.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Panama USA

Distribution of Population by Age Bracket(percentage)

0

5

10

15

20

25

30

35

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

45.5

46.0

46.5

47.0

47.5

48.0

48.5

0 to 14 years 45 to 64 years65+ 15 to 44 years (right axis)

73


Retail and Consumption

• Nominal Value-Added Retail Sector (NIA): US$489.3 in 2003 and US$729.3 million in 2007

• Private Consumption in Food and Beverages: US$3.8 billion in 2007

• Imports of Consumption Goods: US$2.6 billion in 2007, of which US$734 million were non-durable goods and estimated to have been US$1 billion in 2008

• Consumer confidence index indicates positive outlook in the next 12 months.

• Positive outlook at household and country level

74


8.19,0371421,288Russia

45,595

8,766

9,720

6,847

975

2,483

GDP per Capita ($)

303

75

105

192

1,169

1,321

Population(Millions)

4.5656Turkey

2.013,808U.S.

3.21,023Mexico

5.41,313Brazil

9.01,140India

11.93,281China

Real GDP Growth (%)

GDP ($Billions)

A Comparison of Key Emerging Markets in 2007

75


Bottom Line

• The global recession now underway will be the most severe of the postwar era

• If the financial crisis dissipates, a modest rebound in 2010 is possible, if not …

• De-leveraging in worst-hit countries could take years

• Falling commodity prices will rebalance growth and change the terms of trade

• North American resilience and Asian dynamism will reassert themselves once the crisis has blown over

Thank you!Thank you!

Rafael Amiel


[email protected]

610.490.2723

Documents

The World Economic Crisis and its Impact on Latin Americaaapa.files.cms-plus.com/SeminarPresentations/2009Seminars... · Impact on Latin America Rafael Amiel Managing Director, Latin