Presentation is loading. Please wait.

Presentation is loading. Please wait.

1 Latin America in 2006: Beyond the Political Cycle COFACE Country Risk Conference Paris January 24 2006 Javier Santiso Chief Development Economist & Deputy.

Similar presentations


Presentation on theme: "1 Latin America in 2006: Beyond the Political Cycle COFACE Country Risk Conference Paris January 24 2006 Javier Santiso Chief Development Economist & Deputy."— Presentation transcript:

1 1 Latin America in 2006: Beyond the Political Cycle COFACE Country Risk Conference Paris January Javier Santiso Chief Development Economist & Deputy Director OECD Development Centre

2 2 VENEZUELA ECUADOR PERÚ PARAGUAY ARGENTINA URUGUAY MÉXICO BRAZIL COLOMBIA CHILE EL SALVADOR NICARAGUA HONDURAS COSTA RICA GUATEMALA PANAMÁ REPÚBLICA DOMINICANA BOLIVIA Next presidential elections Latin America 2006: The political cycle is back

3 3 The timing game: Political cycles and crises in Latin America used to be synchronized, Nominal exchange rate depreciation and government change 0,94 0,96 0,98 1 1,02 1,04 1,06 1,08 1,1 1,12 1,14 1, Source: Frieden, Ghezzi y Stein, 2001 Country`s Total Elections 1Colombia Costa Rica Guatemala Ecuador Chile Peru Honduras Paraguay Brazil El Salvador Republica Dom Uruguay Mexico Argentina Nicaragua Panama Venezuela Bolivia

4 4 During the period , some countries achieved a decoupling: The case of Mexico Source: Jorge Blázquez and Javier Santiso, Timing of Presidential Elections and Exchange Rate Depreciations in Mexico, Election Year

5 5 While others had overcome the test of fire more recently: The case of Brazil Source: Based on Juan Martínez and Javier Santiso, 2003.

6 Inflation (end of year, %) 340,110,86,8 Fiscal budget (% GDP) -3,3-3,2-1,1 Current account (% GDP) -3,2 1,2 Trade openness (% GDP) 28,836,344,6 Debt service (% of exports) 35%37%27% External debt (% of exports) 274%207%154% External public debt (% of exports) 170%109%84% Source: BBVA But, above all, the macroeconomic starting point is very different: 1994 vs 2004

7 7 The stars have been lined up for Latin America: Global growth boosted exports GDP Growth (%) World Source: WEO 2005 US Southeast Asia

8 8 Venezuela 83.1% Peru 70.7% Chile 59.1% Colombia 46.3% Argentina 38.0% Brazil 29.6% Mexico 14.6% Latam31.2% Source: BBVA over total exports (2004) Exports of commodities Source: BBVA BBVA-MAP Index of Latin America commodity prices (100 =jan03) TOTAL Without oil The stars have been lined up for Latin America: Commodity boom has been a bonanza

9 9 Source: Based on domestic sources Figures for 2004 and 2005 are forecasts Growth of GDB in China (Annual Percentage variation) Exports to China in 2003 (Percentage of total) The stars have been lined up for Latin America: China became a major trading partner

10 10 Latin America Ecuador Paraguay Bolivia Venezuela Chile Argentina Uruguay Colombia Peru Indonesia Brazil Canada Netherlands India Thailand Spain Malaysia Mexico Belgium UK France US Singapore Italy China Germany South Korea Taiwan Hong Kong Japan Source: WTO Exports of agricultural, energy and minery products (in % over the total) (2003) The stars have been lined up for Latin America: Asia is becoming a major growth pilar

11 average: 8% average: 350% The emergence of the political economy of the possible: The monetary anchor

12 (f)2006(f) Source: BBVA; (f) forecast Fiscal balance in Latin America (% GDP) average average The emergence of the political economy of the possible: The fiscal anchor

13 Source: OECD, WTO and IMF Trade openness (trade flows over GDP; %) The emergence of the political economy of the possible: The trade anchor

14 14 Brazil: trade openness and catching-up process Successful Asian emerging countries were able to simultaneously combine growth with a trade openness proccess. Brazil has recently started to open up its economy. It is also obtaining record trade surpluses: nearly 45 billion dollars in 2005; up 25% from the previous year.

15 15 Top 100 firms in Latin-America BrazilMexicoChileArgentinaEcuadorColombiaPeruVenezuela Source: America Economia 2005 Brazil: Firms began to expand overseas

16 16 Number of firms in Forbes IndiaSpainChinaBrazilMexicoChile Source: Forbes 2000 Brazil: Firms rallied the Mexican multilatinas The 50 more profitable firms BrazilMexicoChileArgentinaColombiaEcuadorPanamaPeruVenezuela Source: America Economia 2005

17 17 In dealing with the multiple and complex problems of development, we have learnt that we must be deaf, like Ulysses, to the seductive chant of the unique paradigm. Albert Hirschman The political economy of the possible: The Latin American silent great transformation

18 18 Thank you for your attention!


Download ppt "1 Latin America in 2006: Beyond the Political Cycle COFACE Country Risk Conference Paris January 24 2006 Javier Santiso Chief Development Economist & Deputy."

Similar presentations


Ads by Google