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Latin America and
the Caribbean
Regional Analysis
Introduction
4thLargest Continent
41 Countries
5.6% of the world’s GDP
Political
Mostly Republics with written constitutions.
Government System
ArgentinaVenezuela
Brazil
Federal systems
BoliviaChilePeru
Centralized systems
French Guinea;Falkland Islands
French; British territories
South America
• Guatemala and Honduras: constitutional democratic republic
• Costa Rica: democratic republic• Panama: constitutional democracy • Belize: parliamentary democracy
Government System
Mostly some form of republics
CaribbeanIslands
Government System
The Bahamas and Jamaica have constitutional parliamentary democracies
Cuba is a Communist state.
Puerto Rico is a commonwealth
Elections in Latin America
October Elections
June
2014Columbia Elections
Mostly fairSome allegations of corruption
Bolivia
Brazil
Uruguay3
Foreign influence: Previously USA had a lot of influence
Most governments remain full term
In recent times the South Americans favored their own leftist leaders.
Corruption
Caribbean20-30
The Bahamas
South America30-40
Chile
According to Corruption Perception Index
Least corrupt
71
• After WWII: movement toward more democratic forms of governance and multi-party states
• 1960s: predominance of military and dictatorial regimes
• 1980s: shift toward more democratic systems with multi-party elections, and almost all colonies had become either self-governing or independent.
• Present: more socialist.
Political trends
Re election trend
1980s:Cuba, Nicaragua, the Dominican Republic, and Paraguay
Present:16 Latin American countries allow reelection
Reelection is limited to non-consecutive terms or two
consecutive terms, Exception: Ecuador
Rafael Correa (Ecuador 2013)Juan Manuel Santos (Colombia)
Seeking own reelection in 2014.
Dilma Rousseff (Brazil)Evo Morales (Bolivia)
Promote growth
Diminish economic and
social inequality
Fight poverty
Main political
agendas
Foreign Relations
(U.N.'s Economic Commission on Latin America and the Caribbean)
USA-Latin America relationship strains
In 2011, China replaced USA as the major trading
partner for Brazil and Chile.
China signed free trade agreements or trade deals with Chile, Peru, Cuba and
Costa Rica
Colombia signed a trade agreement with Canada and is launching negotiations for a free trade agreement with China
Russia expanding its long standing military presence in Cuba and Venezuela
Improving relationships with the other South American and Caribbean countries
Economic
OV
ERV
IEW:
LATIN
AM
ERIC
A &
CA
RIB
BEA
N
GDP: $5.655 trillion in 2013
Growth rate: 2.6 % in 2013 from 3.1% in 2012Economic growth highest in Paraguay (13%), followed by Panama (7.5%),
Bolivia (6.4%) and Peru (5.2%)
Terms of Trade : 2.5% decline in 2013
Foreign Direct Investment: US$ 188 billion in 2013, 6% more than 2012.
Investment was up in economies: Suriname (86%), Panama (61%) and Bolivia
(35%). FDI flow to Central America rose (21%), Caribbean declined (-31%).
Employment:
Unemployment fell from 6.4% in 2012 to 6.3% in 2013. highest unemployment: Colombia (10.6%), Costa Rica (8.3%)
Inflation:
Lowest inflation rate: Peru (2.8%)Highest inflation is seen in Venezuela (63.4%) and Argentina (18.2)
GDP: 2.246 trillionGDP Growth Rate: 2.5%Unemployment: 5.0%Inflation: 6.5% (2014)
• Expected recovery did not materialize• Despite economic slowdown, Brazil continued to
receive strong FDI flows• Limited participation in auction for exploration rights
in Libra oil field • Government prioritized containing inflation by
raising SELIC interest rate to 9.5% in 2013 from a record low of 8% in 2012
• Opening of ports to private investment• S&P cuts Brazil’s credit rating , citing poor growth
BRAZIL
• Growth fell in 2012, rises in 2013 but inflation persisted
• IMF censure hindered access to international capital markets
• S&P lowered the country risk rating to seven levels below investment grade.
• Overvalued exchange rate• Investment scheme for shale deposit
development offered incentives• Nationalizations continue
ARGENTINA
GDP: 611.8 billion
GDP Growth Rate: 3.0%
Unemployment: 7.5%
Inflation: 18.2% (2014)
GDP: 277.2 billion
GDP Growth Rate: 4.1%
Unemployment: 6.5%
Inflation: 4.5% (2014)
• Decline in GDP growth rate• Exports softened but FDI surged• Decline in world copper prices negatively
affected Chile, the world’s largest producer• Highest credit rating in Latin America• Favorable access to bond markets, environment
remains very investor friendly• Net FDI tripled in 2012
CHILE
GDP: 202.3 billion
GDP Growth: 5.8%
Unemployment: 5.9%
Inflation: 2.8% (2014)
• Seems to be losing momentum• GDP Growth was 6.0% in 2012 and has declined
in 2013• Falling metal prices, weaker business
confidence• Satisfactory external performance• Chinese slowdown dampened export growth• FDI continued to increase • Credit rating increased to BBB+, second only to
Chile, and above that of Brazil
PERU
GDP: 438.3 billion
GDP Growth Rate: 1.3%
Unemployment: 7.1%
Inflation: 63.4% (2014)
• Growth collapsed and inflation exploded• Scarcities in essential consumer goods, foreign
exchange shortages, gap between the official dollar exchange rate and black market rate,
• Increased dependence on China• Chinese aid-for-oil compensated for very weak
FDI flows. • Lower oil prices and falling production
contributed to lower export growth• Oil continues to account for 96% of exports. • Venezuela completed its full integration into
Mercosur.
VENEZUELA
THE CARIBBEAN • GDP growth 0.75% in 2013 from close to zero in 2012
• Construction activity bottomed out, tourist arrivals and spending
underperform.
• Stronger growth among commodity exporters- Guyana and Suriname
• Haiti’s economy expanded 4% due to ongoing reconstruction spending
and increased agricultural output and textile exports
• Low inflation
• Current account deficits averaged 17% of GDP in 2013, reflecting a high
oil import bill and persistently poor competitiveness
• Deficits financed through net FDI and official flows, including IMF
• Financing from Venezuela’s PetroCaribe important in some countries
• Fiscal balances deteriorated, public debt levels high
Social
Population
Guatemala 15.419 mil.
Honduras 8.07 mil.
El Salvador 6.32 mil.
Colombia 48.37 mil.
Venezuela 30.30 mil.
Peru 30.29 mil.
Cuba 11.29 mil.
Dominican Republic 10.29 mil.
Haiti 10.26 mil.
Brazil 199.98 mil.
Argentina 41.42 mil.
Chile 17.60 mil.
Andean South America
The Caribbean Brazil + The Southern Cone
Central America
Population: Ageing
Source: ECLAC, Statistical Yearbook for Latin America and the Caribbean
Country 2010 2050
Columbia 5.6% 17.5%
Peru 6.0% 17.1%
Venezuela 5.6% 16.8%
Country 2010 2050
Argentina 10.6% 19.5%
Brazil 6.9% 22.9%
Chile 9.2% 23.6%
Country 2010 2050
Cuba 12.6% 31.1%
Dominican Republic 6% 16.4%
Haiti 4.4% 12.8%
Country 2010 2050
Guatemala 4.4% 9.9%
Honduras 4.3% 13.3%
Panama 6.8% 18.4%
Population aged over 65 years
Poorest income quintile:
Wealthiest income quintile:
Income Distribution
Source: ECLAC, Statistical Yearbook for Latin America and the Caribbean
5% of total income
47% of total income
Argentina .475 Columbia .536 Honduras .567 Dominican Republic
.517
Brazil .567 Peru .449 Guatemala .585
Chile .516 Venezuela .405 Panama .531 Uruguay .379
Rise of the Middle Class
1992 to 2009: The middle class (as a percentage of total population)
Brazil :14.73% to 31.5%
Chile: 23.67% to 42.32%
Source:
World Bank, ‘Economic Mobility and the Rise
of the Latin American Middle Class’ (2013).
Class composition in Latin America by income percentile, selected countries, 2009
Chile
Sou
rce:
UN
ESC
O, A
DU
LT A
ND
YO
UTH
LIT
ERA
CY
Nat
ion
al, r
egio
nal
an
d g
lob
al t
ren
ds,
19
85
-20
15
Brazil
Colombia
Venezuela
90.0%
98.6%
93.6%
95.5%
Honduras
Guatemala
Panama
Cuba
Dominican Republic
75.9%
85.1%
94.1%
99.8%
90.1%
Argentina 97.9%
Adult Literacy Rate
Chile: 80.0 yearsBrazil: 73.9 yearsArgentina: 76.3 years.
Life Expectancy at Birth
Source: Human Development Report 2014
70.8 years
World
Colombia: 74 yearsPeru: 74.9 yearsVenezuela: 79.3 years.
Cuba: 79.3 yearsDominican Republic: 73.4 years
Haiti: 63.1 years
Guatemala: 72.1 yearsHonduras: 73.8 years
Panama: 77.6 years
2013 HDI index for LAC region 0.740
Chile 0.822
Cuba 0.815
Argentina 0.808
Haiti 0.471
Source: Human Development Report 2014
Living Standards
Migration
ArgentinaVenezuelaChileBrazil
Increasing Intra-regional flows
The gender dimension
Main Destinations4
Technological
Access to Electricity
source: data.worldbank.org World Energy Outlook www.iea.org/topics/energypoverty/
Country Access to Electricity in 2011( % of Population)
Argentina 97.2
Bolivia 86.8
Brazil 99.3
Colombia 97.4
Chile 99.4 (2010)
Costa Rica 99.1
Cuba 97.5
Dominican Republic 96.1
El Salvador 91.7
Ecuador 95.5
Guatemala 81.9
Haiti 27.9
Honduras 83.3
Jamaica 92.8
Nicaragua 77.7
Paraguay 98.2
Peru 89.7
Trinidad & Tobago 99
Uruguay 98.6
Venezuela 99.6
7% of the Regional Population- live
without grid-connected electricity
6 countries account for 84% of total
electricity production in the region
Haiti Lowest Access to Electricity
Telecommunication
LAC households subscribe to mobile services
Farmers receive messages on market prices and weather reports
84%
Chile
average price of a handsets more than halved
households with mobile access increased by
40% In Nicaragua
Chile
Uruguay
Argentina
Bahamas
Puerto Rico
source: data.worldbank.org
Access to Internet
Average internet penetration >30%
>50%
Clean tech and Renewable energy
Clean Technology Fund and UNEP’s Green Growth Initiative
“Latin America already has an energy matrix that is cleanest of all region: in terms of power generation, we have almost 70% renewables-three times the world average”
Hydro Natural gas
Brazil: Leader in hydro powerChile: hydro-electric power
generation
6th largest reserve in LAC in Peru
44% of electricity in 2010 from natural gas
source: data.worldbank.org
High Technology Exports
Brazil, Costa Rica & Argentina- top 3 exporters
Country High Technology Exports in 2012( Current US$)
Brazil 8,820,260,626
Costa Rica 2,719,083,321
Argentina 1,945,836,328
Colombia 516,973,271
Chile 503,343,087
Government spending on R&D
Country Research & Development Expenditure in 2011 (% of GDP)
Argentina 0.65
Brazil 1.21
Cuba 0.27
Paraguay 0.05
Uruguay 0.43
Average spending on R&D 0.84%
source: data.worldbank.org
Brazil Highest Spender
Legal
Out of 132 nations:
Brazil 86th
Argentina 95th
Trade Barriers and Openness
South-South trade boom
World’s most closed economy
Venezuela
World Economic Forum’s 2014 report on trade openness:
Committed to free trade
Chile, Peru, Colombia
Trade Blocs: Mercosur
Purpose: “promote free trade and the fluid movement of goods, people, and currency”
A sub-regional bloc
ArgentinaBrazilParaguay UruguayVenezuela
5Members
Trade Blocs: Pacific Alliance
Purpose: “seeks to advance free trade and economic integration among the member states, as well as a visa-free travel area, and common diplomatic representation”
A Latin American trade bloc
ChileColombiaMexicoPeru
4Members
36% of Latin American GDP
Trade Blocs: CARICOM
Purpose: “to promote economic integration and cooperation among its members, to ensure the benefits from integration are equitably shared, to coordinate foreign policy”
Caribbean Community and Common Market
ChileColombiaMexicoPeru
15Members
EU and CARIFORUM enjoy equal trade and investment rights
Minimum wage
Highest in Bahamas: $696Lowest in Bolivia: $118
Labor Laws
5.7 mil.working children
10 yearsminimum working age in Bolivia
40-48 hoursworking hours per week
Property Rights
Chile ranks the highest
Venezuela and Haitiamong the worst 10 in the world
Source – IPRI 2013
Ease of Business
Chile Ranked 34 in the world.Days to start a business – 6 days
Colombia27 reformations since 2005Single window of trade
5 of the top 10 from
the Caribbean
Environmental Regulation Reform
Ecuador
70% tax on windfall profits of mining companies
BrazilSuit against Chevron for oil spillage
PeruReformation of mining law 2014
Environmental
AMAZON ‘the lungs of the world’
5,500,000 square km. rainforest
390 billion individual trees
One in ten known species in the world lives in the Amazon rainforest
Latin America and the CaribbeanHome to
The Amazon Rain Forest
Galapagos Islands
Atacama Deserts
Andean Glaciers
Deforestation
20%Amazon rainforest deforestation (22,392 km2 per year)
50 Football field equivalent area destroyed/minute
• Foreign demand for palm oil, beef, soya and wood products worth an estimated $61 billion annually.
• Conversion of forest to agricultural land (at a rate of around 110,000 ha/year)• Dams for hydroelectric power
Reasons
In just a decade, Brazil has reduced
deforestation by 79% using Remote Sensing, Updated Forest Code in 2012
Brazil turned down deforestation deadline initiative during the Climate summit in New York, 2014
Norway pledged to spend 350million dollars to protect forests in Peru
One Haitian, One TreeInitiative
Carbon Emission
Rapid growth in gasoline consumption and in its vehicle fleet
Deforestation of Amazon Carbon Sink
The region's GHG emissions only represent 9% of the global total.
Energy sector (42%), agriculture (28%), Forestry ( 21%)
• Andes Glaciers in Peru and Ecuador melting
• Island nations like Grenada will spend more than 50% of GDP to adapt
• Mesoamerican coral reef could collapse by 2050 due to ocean acidification.
Climate Change
1.6°C-4°C Rise in temperaturesUS$ 16.8-21.5 trillion/year Adaptation costs
(World Bank 2010)
Extreme Weather Conditions
• Drought in Brazil due to absence of the ‘flying rivers’
• Record flood in Sao Paolo and Northern Bolivia
Tourism
• In 2013, over 48.4 million international tourist arrivals
• 5.4 million tourists to Brazil
• 19.5 million tourists to the Caribbean
• Rising Eco-tourism in the Caribbean – 14.8 percent of the GDP
• Tax incentives for new projects –
Galleon Bay in Antigua - Reduction of 75% on property tax
Curacao Airport City – Tax Holiday
Source: Wikipedia, CAIPA
Impact of Climate Change on Business
Agriculture - 3.1 billion dollars a year in losses after 2020. Yields will fall 25 percent by 2050.
Ex – Reduced Coffee Production in Colombia
Tourism - Sea level rise of 1 meter - 266 out of 906 tourism resorts at risk
US$ 1,430 million per year losses in tourism expenditure in the Caribbean
Thank
You
