CONTENT External context and its impact in the region Macroeconomic - PowerPoint PPT Presentation

CONTENT • External context and its impact in the region • Macroeconomic trends • Space for policies • Prospects and challenges

External context and its impact in the region

The external context and its impact in the region • Slow and heterogeneous recuperation of the global economy: – Modest recuperation in the United States of 2.1% with a greater impact on Mexico, Central America and the Caribbean – Growth in the Eurozone continues to be low at 0.8%, lack of competitiveness, high levels of unemployment with a negative impact on global trade – Slowing growth in China at 7.3% with an impact on natural resources exporting countries • End of QE in the United States, though liquidity in international financial markets holds steady, reflecting expansionary monetary policies in other developed economies. Changes in the composition of external portfolios have led to exchange rate volatility

In 2014, global economic growth registered a slight recovery Heterogeneous growth in developed countries and deceleration in developing countries in particular in China ECONOMIC GROWTH BY REGIONS AND SELECTED COUNTRIES, 2007-2010 TO 2014 ( In percentages ) 12 10.8 10 9.3 7.7 7.7 8 7.3 5.9 5.9 6 4.7 4.7 4.4 4 2.8 2.8 2.6 2.4 2.2 2.3 2.1 1.8 1.8 1.6 2 1.5 1.6 1.5 1.3 1.4 1.2 0.8 0.8 0.3 0.3 0.2 0.0 0 -0.5 -0.6 -0.7 -2 World Developed United States Japan Euro area Developing China countries Countries 2007-2010 2011 2012 2013 2014ᵃ Source : UN DESA. Global Economic Outlook. October 2014. a Projections.

Economic growth was heterogeneous during 2014 among countries LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH RATES, 2014 a ( In percentages) Panamá 6.0 Guyana 4.5 Dominican Republic 6.0 Bolivia (Plur. State of) Suriname 3.5 5.2 Colombia 4.8 Belize 3.4 Nicaragua 4.5 Paraguay 4.0 Saint Kitts and Nevis 2.8 Guatemala 4.0 Ecuador 4.0 Antigua and Barbuda 2.7 Central America 3.7 Bahamas 2.3 Costa Rica 3.6 Haiti 3.5 Saint Vincent and the Grenadines 2.2 Uruguay 3.5 Honduras 3.0 The Caribbean 1.9 Peru 2.8 El Salvador 2.2 Trinidad and Tobago 1.8 Mexico 2.1 Grenada 1.3 The Caribbean 1.9 Chile 1.8 Jamaica 1.2 Cuba 1.1 Latin America and the Caribbean 1.1 Dominica 1.1 South America 0.7 Barbados 0.0 Brazil 0.2 Argentina -0.3 Saint Lucia -1.4 Venezuela (Bol. Rep. of) -3.0 -4 -3 -2 -1 0 1 2 3 4 5 6 7 -2 -1 0 1 2 3 4 5 Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures. a Estimations.

Macroeconomic trends

As of the third and fourth quarter a change in the deceleration trend was observed LATIN AMERICA AND THE CARIBBEAN: QUARTERLY GROSS DOMESTIC PRODUCT, YEAR-ON-YEAR PERCENTAGE CHANGE, 2007-2014 ( In percentages based on constant 2010 dollars ) 8 6 4 2 0 - 2 - 4 - 6 I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV 2007 2008 2009 2010 2011 2012 2013 2014 Latin America and the Caribbean Estimation IV qtr 2014 Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures.

The participation of investment in domestic demand has fallen steadily since 2011… LATIN AMERICA: EVOLUTION OF GDP AND THE CONTRIBUTION OF THE COMPONENTS OF AGREGATE DEMAND, 2002-2014 a ( In percentages based on constant 2010 dollars ) 10 8 6 4.6 4.8 3.4 4.3 4 3.9 3.4 3.3 2 3.4 1.4 2.2 0.8 2.3 3.1 2.7 2.3 2.1 2.1 0.9 1.7 1.4 0.8 1.3 0.7 0.3 0.5 0.5 0.4 0 -0.1 -0.1 -1.0 -1.1 -1.3 -1.3 -1.4 -1.5 -1.6 -1.5 -1.1 -2.6 - 2 - 4 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Net exports Investment Consumption GDP Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures. a Estimations.

…which reflects the fact that investment dynamism has been consistently decelerating and volatile LATIN AMERICA: GROSS FIXED CAPITAL FORMATION, 2000-2014 a ( In percentages based on national currency at constant prices and constant 2010 dollars ) 25 15 5 Latin America Central America Rest of South America - 5 Mexico Brazil - 15 - 25 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures. a Estimations.

The region exhibits differences in inflation trajectories LATIN AMERICA AND THE CARIBBEAN: 12-MONTH CHANGE IN INFLATION, 2010- 2014 ( In percentages, weighted average) 12 10 8 6 4 2 0 jan mar may jul nov jan mar may jul nov jan mar may jul nov jan mar may jul nov jan mar may jul sep sep sep sep sep 2010 2011 2012 2013 2014 Latin America and the Caribbean South America Mexico and Central America The Caribbean Brazil Mexico Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures. a Estimations.

Despite slowing economic growth unemployment fell slightly… LATIN AMERICA AND THE CARIBBEAN (10 COUNTRIES): PARTICIPATION, EMPLOYMENT AND URBAN UNEMPLOYMENT RATES, 2011-Q1 TO 2014-Q3 (In percentages, 1-year moving average) 61 7.5 60 7 59 6.5 58 57 6 56 5.5 55 54 5 2011- 2011- 2012- 2012- 2013- 2013- 2014- 2014- Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Unemployment rate (right axis) Employment rate (left axis) Participation rate (left axis) Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures.

… and real wages grew moderately LATIN AMERICA (SELECTED COUNTRIES): FORMAL SECTOR REAL WAGES, 2012 – FIRST TO THIRD QUARTER OF 2014 ( Year-over percentage change ) 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 -0.5 BRA CHI COL CRI MEX NIC PAN PRY URY 2012 2013 Q1-Q3 2014 Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures.

The current account deficit registered a slight improvement LATIN AMERICA: CURRENT ACCOUNT STRUCTURE, 2006-2014 a ( In percentages of GDP ) 6 5 2.0 4 3 1.7 1.4 2 1.1 1.5 1.2 1.4 1.0 1 2.0 1.0 1.0 3.1 1.4 1.3 0.8 0.9 1.1 0.3 0.2 0.3 0 - 0.7 - 0.9 - 0.8 - 0.8 - 1.1 - 1.4 - 1.3 - 1.2 - 1.3 - 0.6 - 1 - 0.9 - 1.3 - 1.4 - 2 - 1.8 - 2.3 - 2.6 - 2.5 - 2.5 - 2.7 - 3 - 3.0 - 2.4 - 2.5 - 2.4 - 2.4 - 2.6 - 4 2006 2007 2008 2009 2010 2011 2012 2013 2014 Goods balance Services balance Income balance Current transfers balance Current account balance Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures. a Projections.

A greater decline in imports on average as compared to exports contributed to stabilizing the current account balance LATIN AMERICA (COUNTRY GROUPINGS): EXPORTS AND IMPORTS, 2014 a ( Annualized percentages ) Exports Imports -0.7 Latin America -1.0 -4.2 South America -5.1 Central America -0.5 -0.4 Brazil -3.8 -3.9 Mexico 4.4 5.1 - 8 - 6 - 4 - 2 0 2 4 6 8 - 8 - 6 - 4 - 2 0 2 4 6 8 Volume Price Value Volume Price Value Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures. a Projections.

Falling commodities prices led to a decline in the terms of trade for the region on average LATIN AMERICA: ESTIMATED PERCENTAGE CHANGE IN THE TERMS OF TRADE, 2011-2014 a ( In percentages ) Mexico Brazil Latin America and the Caribbean Central America, Haiti and Dominican Republic Exporters of hydrocarbonsᵇ Exporters of agro-industrial products ᶜ Exporters of minerals and metalsᵈ The Caribbean (excl Trinidad y Tobago) 0, 1 - 15 - 10 - 5 0 5 10 15 2011 2012 2013 2014ᵃ Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures. a Projections. b Bolivia (Plur. State of), Colombia, Ecuador, Trinidad and Tobago and Venezuela (Bol. Rep. of). c Argentina, Paraguay and Uruguay. d Chile and Peru.

Continued access to external financial markets, but a changed composition of inflows increases latent vulnerability LATIN AMERICA (17 COUNTRIES): FINANCIAL ACCOUNT COMPONENTS AND EMBI+ , 2010-2014 ( In percentages of GDP and basis points ) 6 500 450 4 400 350 2 Percentage of GDP 300 0 250 points Basis 200 -2 150 100 -4 50 -6 0 I II III IV I II III IV I II III IV I II III IV I II 2010 2011 2012 2013 2014 Capital account balance Net foreign direct investment Net portfolio investment Net other investment liabilities Errors and omissions Reserves and related items Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures.

Space for policies