Download 1-Augusto Lopez Claros

14/04/2013
Vision to the Future –
Economic and Energy Scenarios
Augusto Lopez-Claros
Director, Global Indicators and Analysis Group
World Bank Group
Punta del Este, Uruguay
April 10, 2013
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Vision to the Future
Some thoughts on the global economic outlook
Energy trends and challenges in Latin America
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Selected Countries:
Real GDP Growth 2007-12 and Forecasts 2013
2009
2010
2011
2012
2013
-0.5
5.1
3.8
3.3
3.6
Advanced Economies
-3.4
3.0
1.6
1.3
1.5
United States
-2.6
2.4
1.8
2.2
2.1
Euro Area
-4.1
2.0
1.4
-0.4
0.2
Japan
-6.3
4.5
-0.8
2.2
1.2
Emerging Market and Developing Economies
2.7
7.4
6.2
5.3
5.6
Russia
-7.8
4.3
4.3
3.7
3.8
China
9.2
10.4
9.2
7.8
8.2
India
6.8
10.1
6.8
4.9
6.0
Brazil
-0.6
7.5
2.7
1.5
4.0
Mexico
-6.1
5.6
3.9
3.8
3.5
World Output
Source: International Monetary Fund
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Selected Countries: General Government Gross
Debt in % of GDP 2007-12 and Forecasts 2013-15
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
France
64.2
68.3
79.0
82.4
86.3
89.0
90.8
90.6
89.6
87.5
Greece
105.4
110.7
127.1
142.8
163.3
161.2
165.3
158.8
151.3
143.6
Italy
103.1
105.8
116.1
118.7
120.1
123.4
123.8
123.4
122.3
120.7
Spain
36.3
40.2
53.9
61.2
68.5
79.0
84.0
87.4
89.3
90.7
Sweden
40.2
38.8
42.5
39.4
37.4
35.5
33.5
30.5
27.4
24.1
Switzerland
55.9
52.6
53.6
50.1
48.6
48.9
47.8
46.0
45.3
44.6
United Kingdom
43.9
52.5
68.4
75.1
82.5
88.4
91.4
92.8
92.2
90.1
United States
67.2
76.1
89.9
98.5
102.9
106.6
110.2
111.9
112.5
112.8
Source: International Monetary Fund
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General Government Gross Debt Ratios
(Percent of GDP; 2009 PPP-GDP weighted average)
Source: IMF Fiscal Monitor November 2010 from IMF staff estimates based on October 2010
WEO projections.
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Selected Countries:
General Government Balance in % of GDP 2007-12
and Forecasts 2013-16
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
France
-2.8
-3.3
-7.6
-7.1
-5.3
-4.6
-3.9
-3.1
-2.2
-1.3
Greece
-6.7
-9.7
-15.6
-10.6
-9.2
-7.2
-4.6
-2.1
-1.6
-1.6
Italy
-1.5
-2.7
-5.4
-4.5
-3.9
-2.4
-1.5
-1.6
-1.5
-1.3
Spain
1.9
-4.2
-11.2
-9.3
-8.5
-6.0
-5.7
-5.2
-4.8
-4.4
Sweden
3.6
2.2
-0.9
-0.2
0.1
-0.1
0.5
1.3
1.6
2.2
Switzerland
1.4
1.9
0.5
0.2
0.4
0.2
0.2
0.5
0.6
0.6
United Kingdom
-2.7
-4.9
-10.4
-9.9
-8.7
-8.0
-6.6
-5.0
-3.6
-2.1
United States
-2.7
-6.7
-13.0
-10.5
-9.6
-8.1
-6.3
-4.9
-4.4
-4.5
Source: International Monetary Fund
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Selected Advanced Economies Gross Financing
Needs 2010-111 (Percent of GDP)
2010
2011
Maturing
Debt
Budget
Deficit
Total
Financing
Need
Maturing
Debt
Budget
Deficit
Total
Financing
Need
United States
15.4
11.1
26.5
18.1
9.7
27.8
Italy
20.3
5.1
25.4
18.2
4.3
22.5
France
14.3
8.0
22.3
16.0
6.0
22.0
Spain
10.8
9.3
20.1
11.0
6.9
17.9
4.1
2.2
6.3
4.5
1.4
5.9
Sweden
Sources: IMF Fiscal Monitor November 2010; and October 2010 WEO.
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Social Costs
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Social Costs
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Projected Increases in Health Spending 2011–30
(Percent of GDP)
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3
2
1
0
Advanced
Economies
Europe
United States
Source: IMF Fiscal Monitor November 2010 from IMF staff calculations.
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Social Costs
•
The OECD predicts that by 2050, the increase in public budget
expenditure on health and pensions as a proportion of GDP will be
between 9 and 10 percentage points higher in the EU than in the US.
But how can the EU cope with such a large level of public expenditure
when its ratio of public debt to GDP is already close to 70 percent?
•
The only way to do so is by making its economy more productive and
its welfare state more efficient and less burdensome. Specific reforms
might include the following:
•
Increasing the age of retirement
•
increasing the number of hours worked
•
selective immigration (to rejuvenate the workforce and increase the
number of contributors to social security)
•
measures to encourage more private savings for retirement
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Population growth
Figure 1. Population growth over the past two centuries
(in billions)
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8
7
6
5
4
3
2
1
0
1800
1950
1960
1970
1980
1990
2000
2010
2020
2025
2030
2040
2050
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Changes in the Global Economy
• Further drop in the cost of communications
• Increasingly global perspective of businesses in framing decisions
and strategies
• Revolution in transportation and implications for location
• Role of alliances and networks
• Remote services
• Hyper competition
• Role of language, loyalty to home societies and inertia
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Governance Gap
Complexity
World Economy
Demographic Trends
Governance gap
Human Institutions
Time
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Global Problems Requiring Collective Action
• Global warming
• Terrorism and conflict prevention
• Tropical forests
• Education
• Bio diversity loss
• Trade liberalization and distribution of
• Fight against poverty
benefits
• Global financial
architecture
• E-commerce
• Illegal drugs
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To Reduce Governance Gap
Complexity
World Economy
Demographic Trends
Governance gap
Human Institutions
Time
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Energy trends and challenges in Latin America
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Challenges in Latin America and the Caribbean (LAC)
Under modest GDP growth assumptions, the demand for
electricity in LAC would more than double by 2030.
– Under current expansion plans, the Region would need to add
more than 239 GW of new power generating capacity to meet
demand, compared with an installed generation capacity of
around 295 GW in 2008.
There are large disparities in electricity access rates in LAC.
Countries face significant supply-demand imbalances (especially
during dry years), and there are large differences in connection
rates and affordability.
– There are an estimated 40 million people in the region without
access to electricity (Peru: 6.5m; Brazil: 4.3m; Colombia: 3.0m;
Guatemala: 2.7m).
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Doing Business – Getting electricity indicators
Ranking of various LAC economies on the Doing Business - Getting electricity indicators
(out of 185 economies)
Germany
2
Korea, Rep.
3
Sweden
Panama
9
16
Uruguay
20
Finland
21
Brazil
Argentina
Bolivia
Venezuela, RB
60
74
126
160
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“Connecting the Americas 2022”
Addresses energy challenges in LAC
Goal: to achieve universal access to electricity by 2022 in
LAC
Who: Initiative launched by Colombia's former Minister of Mines
and Energy Mauricio Cardenas and the U.S. Secretary of State
at the Sixth Summit of the Americas in April 2012
How: through enhanced electrical interconnections, power
sector investment, renewable energy development, and
cooperation
Agenda: the newest initiative is under the Energy and Climate
Partnership of the Americas.
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“Connecting the Americas 2022”
Actions
Support for projects of smart grid technology in Latin America
Technical assistance to support the development of commercially sustainable
energy exchanges between regions of Central America, Mexico and Colombia
Studies of electrical inter‐connectivity between Puerto Rico and U.S. Virgin
Islands and St. Kitts and Nevis
Ministerial dialogue with countries in the Caribbean, donor governments and
regional institutions to discuss possible electrical connections via underwater
cables and development of renewable energy
Improvement of electricity trade between the US and Canada through the
consultative energy mechanism
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Positive impacts of greater interconnection in LAC
Greater interconnection has positive impacts
Economies with excess power export electricity to ones with a power
deficit
Greater integration of renewable energy resources, as well as power
exchanges among countries with varying climate and seasonal needs
Larger size of power markets, creating economies of scale, which can
attract private investment; lower capital costs; and reduce electricity
costs for consumers
Reduced generation costs at the country level since consumers benefit
from access to other countries’ larger and low-cost generation facilities
Regional energy trade also reduces the need for costly domestic
reserve requirements and enhances supply security by maximizing
potential complementarities from different sources
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Energy (in)efficiencies in LAC
Electricity loss through inefficient distribution is a major problem in LAC.
The registered losses in electricity distribution in 2005 equaled the total
combined energy consumption of Argentina, Chile and Colombia.
Currently, the average losses hover around 16 percent of the region's
total output.
Programs to save energy are being adopted across the region at all levels,
including loss reduction and light bulb exchange initiatives such as
Brazil's Eletrobras Distribution Rehabilitation Project ($495 million)
Mexico's Lighting and Appliances Efficiency Project ($350 million)
Uruguay's innovative Energy Efficiency Project ($7 million) where
school children encourage their parents to refrain from wasting
energy
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Energy (in)efficiencies in LAC
Lack of cooperation aimed at enhancing complementarities (e.g. Bolivia
and Chile)
Venezuela, RB: Petroleum resources used by populist regimes as a
strategy for geopolitical influence. Former liberalization policies were
replaced with a nationalization of the industry. PDVSA became operator and
majority shareholder of all oil projects in the country. Result: a decline in
Venezuela’s oil production
Ecuador: Tensions resulted in many foreign companies canceling contracts
and withdrawing production in the country. Result: a decrease in private
companies’ output, but an increase in that of state-owned companies,
PetroEcuador and PetroAmazonas. Ecuador’s overall production has
stagnated around 500,000 barrels/day.
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State ownership in the energy sector in LAC:
Petrobras case
Nationalist mandate to buy ships, oil platforms, and other equipment from
Brazilian companies
Government keeps domestic fuel prices relatively low, to keep inflation
from accelerating
Consequences :
In 2012, Petrobras’ production fell 2 percent, the first such decline in
years.
Petrobras facing soaring debt while major projects mired in delays.
Older fields, once prodigious, are yielding less oil.
The undersea bounty in the company’s grasp also remains devilishly
complex to exploit.
The company is facing a cash crisis and has become famous for late
payment of its bills.
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State ownership in the energy sector: Petrobras case
Petrobras still lacks enough refineries to process crude oil, forcing it
to buy increasing amounts of gasoline from abroad.
Petrobras is still losing money on gasoline imports as the
government keeps domestic fuel prices relatively low.
Gasoline demand is expected to climb even higher as Brazilians buy
more cars.
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State ownership in the energy sector: Pemex case
Under the Mexican constitution, Pemex is only allowed to offer
limited-service contracts to private companies.
Consequences:
Production has fallen to 2.6m barrels a day from a peak of
3.4m in 2004.
Lack of capacity has left the country importing oil and gas
from the US, even though it sits on 115bn barrels of reserves.
This level is equivalent to Kuwait’s.
Experts say that without greater foreign investment and
technology Mexico could cease to be a major energy exporter
within six years.
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State ownership in the energy sector: Pemex case
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Energy subsidies in LAC – pre tax
LAC: over 7.5 percent of global energy subsidies;
around 0.5 percent of regional GDP or 2 percent
of total government revenues, with petroleum
subsidies accounting for nearly 65 percent. Total
pre-tax energy subsidies in the region exceeded
US$36 billion in 2011.
Energy subsidies cost Ecuador approximately
US$5 billion per year, Mexico US$10 billion per
year, and Venezuela up to US$20 billion per year
(Source: IEA).
According to IEA (2011):
"Fossil fuel subsidies costs generally outweigh
the benefits”
“Only 8% of fossil-fuel subsidies in 2010 were
distributed to the poorest 20% of the
population”
Source: International Monetary Fund
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Energy subsidies in LAC – accounting for
taxes and externalities
Source: International Monetary Fund
Taking tax and externalities into account -> Post-tax global energy subsidies increase
four-fold to US$1.90 trillion.
IN LAC, externalities alone cost slightly more than pre-tax subsidies.
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Post-tax subsidies in petroleum products in LAC – a
country comparison
% GDP
USD billion
Argentina
0.31
1.35
Bolivia
4.88
1.17
Chile
2.36
0.87
Ecuador
9.70
6.33
Mexico
1.98
23.47
Trinidad and Tobago
5.78
1.28
Venezuela
8.11
25.13
Source: International Monetary Fund
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Today the region is a net importer of gasoline and
diesel
Vehicle demand surging and production of diesel and gasoline stagnating
Result: negative net trade
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Population living on less than 1.25 dollars a day
LAC
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Literacy rates have climbed in LAC, but unevenly
Those countries that had the greatest ground to cover did improve, but
many still lag behind the rest of the region.
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