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Contents of the presentation
I. The external context: a mixed
picture with a heterogeneous impact.
II. Regional economic growth: a
worrying weakness of the principal
components of demand.
III. Macroeconomic policies: narrowing
space for action.
IV. The medium term: challenges facing
the region.
I.
THE EXTERNAL CONTEXT:
A MIXED PICTURE WITH A
HETEROGENEOUS IMPACT.
Global growth to increase moderately
in 2014
SELECTED REGIONS AND COUNTRIES: GDP GROWTH RATE, 2007-2014
(Percentages)
12
10
8
6
4
2
0
-2
2007-2010
2011
2012
2013
2014 ª
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of figures from UN/DESA, World
Economic Situation and Prospects 2014, update as of mid-2014, New York, 2014.
a Projections.
The dynamic of the external demand recovers,
but remains below the levels of the greater part
of the last decade
LATIN AMERICA AND THE CARIBBEAN: COMMERCIAL PARTNER’S GDP
GROWTH RATE, 2000-2014
(Percentages)
6
5
4
3
2
1
0
-1
-2
-3
-4
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
GDP comercial partners of Latin America
Period average
GDP comercial partners of the Caribbean
Period average
2010
2011
2012
2013 2014ª
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of figures from UN/DESA, World
Economic Situation and Prospects 2014, update as of mid-2014, New York, 2014.
a Projections.
Imports have registered a slight increase in
developed countries
YEAR-ON-YEAR VARIATION IN WORLD IMPORT VOLUME BY REGION, THREEMONTH MOVING AVERAGE, JANUARY 2012 TO APRIL 2014
(Percentages)
15
10
5
0
-5
- 10
Estados Unidos
Japón
Zona del Euro
América Latina
Economías emergentes de Asia
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of figures from the Netherlands Bureau
of Economic Policy Analysis (CPB).
The performance of commodities prices was mixed
early in the year, though generally at lower levels
than in the previous year
LATIN AMERICA: PRICE INDICES FOR EXPORT COMMODITIES AND
MANUFACTURED GOODS, THREE-MONTH MOVING AVERAGE, JANUARY 2009
TO MAY 2014 a
(Index 2005=100)
320
300
280
260
240
220
200
180
160
140
120
100
80
Food
Tropical beverages
Oils and oilseeds
Minerals and metals
Energy
Manufactures
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of figures from the United Nations Conference on Trade and
Development (UNCTAD) and the Netherlands Bureau of Economic Policy Analysis (CPB).
a The export commodity groups are weighted according to their share of Latin America’s export basket.
Terms of trade deteriorate for the third year in a row
LATIN AMERICA AND THE CARIBBEAN: VARIATION IN THE TERMS OF TRADE,
2011-2014a
(Percentages)
8
6
4
2
0
-2
-4
-6
-8
- 10
Latin America
and the
Caribbean
Exp. of minerals
and metals
Exp. of
agroindustrial
productsᶜ
Central America
2011
2012
Exp. of
hydrocarbonsᵈ
2013
The Caribbean ᵉ
Brazil
2014
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
a The figures for 2014 are projections. b Chile and Peru. c Argentina, Paraguay and Uruguay. d Bolivia (Plur. State of), Colombia,
Ecuador, Trinidad and Tobago y Venezuela (Bol. Rep. of).
Mexico
In 2014, with the exception of Central America, imports outpace
exports, contributing to a deterioration of the current account
balance
LATIN AMERICA: VARIATION IN EXPORTS AND IMPORTS BY VOLUME AND
PRICES, 2014a
(Percentages)
EXPORTS
IMPORTS
Latin America
Latin America
South America
(except Brazil)
South America
(except Brazil)
Central America
Central America
Brazil
Brazil
Mexico
Mexico
-2
0
Volume
2
4
Price
6
-2
0
Volume
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
a Projections.
2
4
Price
6
Remittances from emigrants in the US
exhibit vigorous growth
LATIN AMERICA AND THE CARIBBEAN (SELECTED COUNTRIES): VARIATION IN
INFLOWS OF REMITTANCES FROM MIGRANTS ABROAD, 2012-2014a
(Percentages)
Mexico
Guatemala
El Salvador
Honduras
Nicaragua
Costa Rica
Bolivia (Plur. State of)
Peru
Colombia
-4
-2
0
2
2012
4
2013
6
8
10
12
2014
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
a The figures for 2014 relate to different periods depending on the countries: El Salvador y Guatemala, January to May; Bolivia (Plur.
State of), Colombia, Mexico and Nicaragua January to April; Costa Rica, Honduras and Peru January to March.
Tourist arrivals rebound
LATIN AMERICA AND THE CARIBBEAN: YEAR-ON-YEAR VARIATION IN
INTERNATIONAL TOURIST ARRIVALS, 2011-2014a
(Percentages)
South America
Central America
The Caribbean
0.0
Mexico
0
2
4
2011
6
2012
8
2013
10
2014ª
12
14
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of figures from the World Tourism
Organization (UNWTO).
a The figures for 2014 relate to the first quarter.
16
The goods balance deteriorates and the
current account balance will register a
deficit similar to the previous year
LATIN AMERICA: STRUCTURE OF THE CURRENT ACCOUNT, 2006-2014a
(Percentages of GDP)
7
5
3
1
-1
-3
-5
2006
2007
2008
2009
2010
2011
Goods balance
Services trade balance
Current transfers balance
Current account balance
2012
2013
Income balance
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
a The figures for 2014 are projections.
2014
Access to international financial markets remains
open, with high levels debt issuance
LATIN AMERICA AND THE CARIBBEAN (19 COUNTRIES): EXTERNAL BOND
ISSUES ON INTERNATIONAL MARKETS AND RISK ACCORDING TO EMBI+,
JANUARY 2007 TO MARCH 2014a
(Millions of dollars and basis points)
9 000
800
8 000
700
6 000
500
5 000
400
4 000
300
3 000
200
2 000
100
1 000
0
0
Banks and corporations
Sovereigns and quasi-sovereigns
EMBI+ (right scale)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of figures from the Latin Finance (bonds
database), JP Morgan and Merrill Lynch.
a The trend of external bond issues for 2014 was estimated using a monthly moving average of the six previous months.
Basis points
600
Jan 2007
Apr
Jul
Oct
Jan 2008
Apr
Jul
Oct
Jan 2009
Apr
Jul
Oct
Jan 2010
Apr
Jul
Oct
Jan 2011
Apr
Jul
Oct
Jan 2012
Apr
Jul
Oct
Jan 2013
Apr
Jul
Oct
Jan 2014
Millions of dollars
7 000
International reserves increase slightly
LATIN AMERICA AND THE CARIBBEAN: VARIATION OF INTERNATIONAL RESERVES
IN 2013 AND 2014ª , AND THEIR TREND, 2000-2014
(Percentages, billions of dollars and percentage of GDP)
Bahamas
900
16
800
14
Dominican Rep.
Belize
700
Peru
Barbados
2014
0
2013
0
2012
Trinidad and Tobago
2011
2
2000
Guatemala
100
2010
Chile
Suriname
4
200
2009
2014
Jamaica
6
300
2008
Bolivia (Plur. State of )
400
2007
2013
Brazil
8
2006
Colombia
500
2005
Honduras
10
2004
Nicaragua
600
2003
Venezuela (Bol. Rep. of )
12
2002
Mexico
Billions of dollars
Costa Rica
2001
Uruguay
Gross international reserves (left scale)
Gross international reserves as a percentage of GDP (right scale)
Argentina
-30 -20 -10 0
10 20 30 40
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
a The figures for 2014 relate to the period of January to May.
Percentage of GDP
Paraguay
The depreciation of national currencies
halted in the second quarter
LATIN AMERICA (SELECTED COUNTRIES): NOMINAL EXCHANGE RATE WITH
RESPECT TO THE UNITED STATES DOLLAR, JANUARY 2012 TO MAY 2014
(Index: January 2008 = 100)
140
BRL
CLP
COP
MXN
PEN
130
120
110
100
90
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
Apr/14
May/14
Feb/14
Mar/14
Jan/14
Nov/13
Dec/13
Sep/13
Oct/13
Aug/13
Jun/13
Jul/13
Apr/13
May/13
Feb/13
Mar/13
Jan/13
Nov/12
Dec/12
Sep/12
Oct/12
Aug/12
Jun/12
Jul/12
Apr/12
May/12
Feb/12
Mar/12
Jan/12
80
The external environment in 2014:
a mixed picture
• Global economic growth is somewhat greater than during the past two
years – though, much less than during the previous decade.
• This is reflected in a slight increase in imports, especially in developing
countries
• Although the prices of the commodities that the region exports have
declined moderately, they remain at high levels.
• The surplus in the goods balance evaporates, while the dynamism of
remittances and tourism prevents a greater increase in the deficit of the
current account of the balance of payments.
• Access to international financial markets remains open.
• The effect of the external environment will differ by country, depending
on their export structure and international integration.
II
REGIONAL ECONOMIC
GROWTH: A WORRYING
WEAKNESS OF THE
PRINCIPAL COMPONENTS OF
DEMAND
Private consumption decelerates and investment
stagnates, while government consumption and
exports drive growth
LATIN AMERICA: QUARTERLY YEAR-ON-YEAR CHANGE IN GDP AND THE
GROWTH CONTRIBUTION OF THE COMPONENTS OF AGGREGATE DEMAND,
FIRST QUARTER 2012 TO FIRST QUARTER 2014
(Percentages, based on dollars at constant 2005 prices)
10
10
8
8
6
6
4
4
2
2
0
0
-2
-2
-4
-4
-6
-6
Q1
Q2
Q3
Q4
Q1
Q2
2012
Q3
Q4
2013
Q1
2014
Private consumption
General government consumption
Gross fixed capital formation
Goods and services exports
Goods and services imports
GDP
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
In the recent past, job creation had supported
significant increases in private consumption
LATIN AMERICA AND THE CARIBBEAN: REAL WAGE BILL AND PRIVATE
CONSUMPTION, YEARLY VARIATION, 1995-2014
(Percentages)
7
6
5
4
3
2
1
0
-1
-2
Real wage bill
Private consumption
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
a Preliminary
b Projection
This dynamic is weakening.
In 2014, limited job creation is behind the
weakness in private consumption
LATIN AMERICA AND THE CARIBBEAN (10 COUNTRIES): YEAR-ON-YEAR
VARIATION IN EMPLOYMENT AND UNEMPLOYMENT RATES, FIRST QUARTER
2008 TO FIRST QUARTER 2014a
(Percentage points)
1.5
1.0
0.5
0.0
- 0.5
- 1.0
Employment rate
2014 Q1
Q4
Q3
Q2
2013 Q 1
Q4
Q3
Q2
2012 Q 1
Q4
Q3
Q2
2011 Q 1
Q4
Q3
Q2
2010 Q 1
Q4
Q3
Q2
2009 Q 1
Q4
Q3
Q2
2008 Q 1
- 1.5
Unemployment rate
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
a Preliminary figures.
Even so, the unemployment rate continued to drop due to lower labor market participation.
III
MACROECONOMIC POLICIES:
NARROWING SPACE FOR
ACTION.
Inflation in the region exhibits different
trajectories between sub-regions
LATIN AMERICA AND THE CARIBBEAN: TWELVE-MONTH VARIATION IN THE
CONSUMER PRICE INDEX, WEIGHTED AVERAGE,
JANUARY 2011 TO MAY 2014
(Percentages)
16
14
12
10
8
6
4
2
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
0
2011
Latin America and the Caribbean
Central America
Brazil
2012
2013
South America
The Caribbean
Mexico
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
2014
Monetary policy faces the dilemma between boosting
growth and controlling inflationary pressures
LATIN AMERICA (COUNTRIES WITH INFLATION TARGETS): MONETARY POLICY
RATE, JANUARY 2013 TO JULY 2014
(Percentages)
12
10
8
6
4
2
0
Brasil
Chile
January 2013
Colombia
December 2013
March 2014
Mexico
July 2014
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
Peru
Credit growth decelerates in the
majority of the countries
LATIN AMERICA AND THE CARIBBEAN (GROUPS OF COUNTRIES): ANNUALIZED
GROWTH OF DOMESTIC CREDIT TO THE PRIVATE SECTOR, JANUARY 2010 TO
MAY 2014
(Percentages)
40
35
30
25
20
15
10
5
0
Inflation targets
Central America
The Caribbean (services)
South America (monetary aggregates)
Dolarized economies
The Caribbean (goods)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
May
Mar
Jan 2014
Nov
Sep
Jul
May
Mar
Jan 2013
Nov
Sep
Jul
May
Mar
Jan 2012
Nov
Sep
Jul
May
Mar
Jan 2011
Nov
Sep
Jul
May
Mar
Jan 2010
-5
Fiscal policy has limited space and faces
the dilemma of re-allocating spending
LATIN AMERICA (19 COUNTRIES): FISCAL INDICATORS OF THE CENTRAL
GOVERNMENT, 2000 - 2014a
(Percentages of GDP)
10
24
8
22
6
20
4
18
2,2
2,1
1,3
-1,0
0,0
0,2
-1,0
14
12
10
2014
2007
2006
2005
2004
2003
2013
-1,8 -1,6 -2,1
-2,5 -2,5
-2,8
-2,9 -2,7 -2,6
2002
2000
-4
-0,4 -0,7 -0,7
-0,5
-1,7
2001
-2,3
0,1
2012
-2
-0,2
2011
0,0
2010
0
-0,6 -0,5
2008
-0,1
16
1,1
0,6
2009
2
Overall balance (left scale)
Primary balance (left scale)
Total revenues (right scale)
Total expenditures (right scale)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
a The figures for 2014 are projections.
In recent years current spending has
outpaced capital spending
LATIN AMERICA AND THE CARIBBEAN: PUBLIC SPENDING OF THE CENTRAL
GOVERNMENT, SIMPLE AVERAGE, 2008-2014
(Percentages of GDP)
30
5.2
2.4
2.3
2.4
17.3
17.8
18.0
2013
2014
4.7
4.7
2.6
2.4
2.4
17.1
16.7
17.0
2010
20
5.2
4.6
2009
4.9
2012
25
5.0
2.3
15
10
15.9
5
Primary current spending
2011
2008
0
Interest
Capital spending
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
Economic growth decelerates again: external conditions,
low investment, sluggish household consumption and
reduced policy space
LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH RATES, 2014a
(Percentages)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
a Projections.
IV
THE MEDIUM TERM:
CHALLENGES FACING THE
REGION.
Characteristics of the external context in
the medium term
• Global economic growth moderately lower than
during the previous decade.
• With structures that result in less dynamism in the
demand for certain commodities.
• Moderate declines in the prices of some goods,
though differing by good and still at levels relatively
high in historic terms.
• Reduced liquidity in international financial markets
leading to a rise in the cost of external financing
compared to the recent period.
The impact will depend on the productive structures and
the specific current vulnerabilities (2012/2013)
Concentration index of exports by products
Exporters of
agroindustrial products
of the South
40
Exporters of
30
Central America
hydrocarbons
20
10
0
Exporters of minerals
The Caribbean
and metals
Mexico
Net external financing needs during the last 10 years as % of
GDP
Exporters of agroindustrial
products of the South
8
6
4
Central America
Exporters of hydrocarbons
2
0
-2
-4
-6
Exporters of minerals and
The Caribbean
metals
Mexico
Brazil
Relative participation of revenues from non renewable
natural resources in public revenues
Past-due loans / Total loan portfolio
Exporters of
agroindustrial products of
the South
40
Central America
30
Exporters of agroindustrial
products of the South
10
Exporters of
hydrocarbons
20
Brazil
Central America
Exporters of hydrocarbons
5
10
0
Exporters of minerals and
metals
The Caribbean
Mexico
0
Exporters of minerals and
metals
The Caribbean
Brazil
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
Mexico
Brazil
In the last two decades, investment has not
been sufficient nor has existing productive
capacity been used effectively
LATIN AMERICA: DETERMINANTS OF GDP GROWTH, 1990-2013
(Percentages)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
Despite the contribution of investment to growth,
investment has remained at levels significantly below
those of other emerging economies
LATIN AMERICA AND SELECTED EMERGING ASIAN COUNTRIES: GROSS
FIXED CAPITAL FORMATION, 1990-2013
(Local currency in constant prices and constant 2005 dollars, as percentage of GDP)
60
50
40
30
20
10
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
Latin America
China
India
Indonesia
Malaysia
Korea, Rep.
Source: ECLAC, on the basis of official data, DESA/United Nations UNDATA, and World Economic Outlook database
Thailand
The contribution of employment issues
(access to quality employment) is crucial in
achieving development with equality
• In the last decade access to quality employment improved due to
strong labour demand and complementary labour policies.
• On the supply side, demographic changes also contributed (lower
dependency ratio).
• This resulted in improvements in indicators related to labour
participation and the unemployment rate, employment in sectors of
high and medium productivity, and employment formality.
• Real salaries grew moderately and with reduced gaps between
employed people with differing levels of qualifications.
• Public policies assumed a more redistributive stance and
contributed to increasing the incomes of the poorest households.
Many jobs were created in medium- and highproductivity sectors, with a greater demand for
medium- and low-skilled workers
LATIN AMERICA: CONTRIBUTION TO NEW EMPLOYMENT BY INDUSTRY AND
PRODUCITIVTY SEGMENT, 2002-2011
(Percentages)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official data.
Job creation contributed to the improvements in income distribution and the
increases in consumption which were registered in the recent period.
The new external context increases the need to
coordinate policies to manage the economic cycle and
the designs to promote development in the longer term
• Apply macroeconomic policies that curb vulnerabilities and take
advantage of strengths, differentiated for specific situations (fiscal
space, stabilizing mechanisms when facing external shocks,
financial systems).
• The increase in potential economic growth with greater and better
investment facilitates the broadening of space for counter-cyclical
policies.
• This increase in investment (public and private) should be focused
on infrastructure and diversification of production.
• Increasing total productivity also requires industrial policies and
reorientation of resources (structural change towards more
productive and inclusive activities) and a better assignment of
resources between sectors (investment, technology, labour-force
training, development of SMEs, intra-regional integration and
industrialization).
In order to advance towards development with equality
a reorientation of policies is required
• Current growth rates are insufficient to deal with social
challenges.
• In both the economic and social spheres the region has
made some advances in the last decade, but the change in
the external context poses new challenges.
• As a result, pacts for investment and productivity are
required now more than ever. These can be a powerful
mechanism to advance towards trajectories of development
with equality and environmental sustainability.
• Take into account three dimensions: short-term policies,
long-term policies, institutional framework.
• Improve the coordination of policies directed towards
promoting investment and productivity.