Uncertain global economic environment moderates expectations o - PowerPoint PPT Presentation

Uncertain global economic environment moderates expectations o Moderation in growth expectations for both advanced and emerging economies: ▪ Weakening of fiscal impulse in the USA, increases possibility of adjustment in growth ▪ Trade tensions between China-US adds to uncertainty ▪ Tensions in Europe: Brexit o Greater financial volatility and more restrictive financing conditions: ▪ Normalization of monetary policy (more advanced in the US, ECB adjusts QE) ▪ More rate increases are expected in 2019 ▪ Continued reduction in appetite for risk of investors ▪ High levels of public and private indebtedness

Global growth losses synchronicity with a bias to deceleration SELECTED REGIONS AND COUNTRIES: GROSS DOMESTIC PRODUCT (GDP) GROWTH, 2017-2020 a ( In percentages ) 8 7.6 7.4 7.4 6.9 7 6.7 6.6 6.3 6.2 6 5 4.6 4.5 4.4 4.3 4 3.2 3.1 3.1 3.1 2.9 3 2.7 2.5 2.4 2.3 2.3 2.2 2.2 2.2 2.1 2.0 2.1 2.1 2.0 2.0 1.9 1.9 1.8 2 1.7 1.7 1.7 1.7 1.4 1.5 1.3 1.2 1.2 1.0 1 0 World Developed United Japan United Eurozone Emerging China Indiaᵇ Economías Federación economies States Kingdom market and en transición de Rusia developing economies 2017 2018ᵃ 2019ᵃ 2020ᵃ Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of the United Nations, World Economic Situation and Prospects, 2019, New York; Capital Economics (Dec. 2018); European Central Bank (September 2018), OECD Economic Outlook (November 2018), Monetary Policy Report of the Central Bank of Chile (September 2018), European Commission Nov 2018 and WEO of the International Monetary Fund (IMF) (October 9, 2018). aThe figures for 2018, 2019 and 2020 are projections.

World trade volume moderates with downside risks YEAR-ON-YEAR GROWTH RATES OF WORLD TRADE VOLUME, THREE-MONTH ROLLING AVERAGES, 2003 A 2019 ( In percentages, based on a seasonally adjusted index ) 20 15 Jan 2003 - Jun 2007 2017 8% 4.6% 10 Forecast 2018 Jul 2011 - Dec 2015 3.9% 5 2% Forecast 0 2019 2016 3.7% 1.5% -5 -10 -15 -20 Jan-03 Aug-03 Oct-04 Dec-05 Jul-06 Feb-07 Sep-07 Nov-08 Jun-09 Jan-10 Aug-10 Oct-11 Dec-12 Jul-13 Feb-14 Sep-14 Nov-15 Jun-16 Jan-17 Aug-17 Oct-18 Dec-19 Mar-04 May-05 Apr-08 Mar-11 May-12 Apr-15 Mar-18 May-19 Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of the Netherlands Bureau of Economic Policy Analysis (CPB), World Trade Monitor, 2018 and the World Trade Organization (WTO), press release of 27 September 2018, for the 2018 and 2019 projections.

… and global liquidity trends lower EVOLUTION OF THE RATE OF VARIATION OF GLOBAL LIQUIDITY, MARCH 2016 TO JUNE 2018 (Percentages) 10 9 8 7 6 5 4 3 2 1 0 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Global liquidity Emerging economies and developing countries Developed countries Source: Bank for International Settlements (BIS), (2018). Note: Liquidity includes the total credit granted by the banks of the United States, Europe and Japan and debt issues in the international markets of the same countries.

With a significant increase in the level of global debt GLOBAL INDEBTEDNESS BY GROUP OF COUNTRIES INDEBTEDNESS BY LATIN AMERICAN COUNTRIES AND AND BY SECTOR, 2010, 2014 AND 2017 BY SECTOR, 2007, 2010, 2013 AND 2017 (In percentages of GDP) (In percentages of GDP) 300 180 160 250 140 200 120 100 150 80 100 60 40 50 20 0 0 2007 2010 2013 2017 2007 2010 2013 2017 2007 2010 2013 2017 2007 2010 2013 2017 2007 2010 2013 2017 2010 2014 2017 2010 2014 2017 2010 2014 2017 Developed Emerging economies Total Argentina Brazil Chile Colombia Mexico economies Government Households Non-financial corporate sector Government Households Non-financial corporate sector Source: BIS database. Source: BIS database.

Volatility and financial uncertainty increases IMPLIED STOCK MARKET VOLATILITY, JANUARY 2016 TO NOVEMBER 2018 Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Bloomberg. Note: The VIX index, prepared by the Chicago Options Exchange (CBOE), measures the expected volatility for the next 30 days and is obtained from the prices of the purchase and sale options on the S&P 500 index. Based on the same logic, the CBOE also generates the VXEEM index, which measures the volatility in emerging markets and the Deutsche Börse, together with Goldman Sachs, produces the V2X index, which measures the volatility in the euro area.

Increased financial volatility and lower risk appetite reflect falling portfolio capital flows into emerging markets CAPITAL FLOWS TO EMERGING MARKETS, ACCUMULATED IN CAPITAL FLOWS TO LATIN AMERICA (13 COUNTRIES), ACCUMULATED IN THE LAST 12 MONTHS, JANUARY 2016 – OCTOBER 2018 a THE LAST 12 MONTHS, JANUARY 2016 - SEPTEMBER 2018 (In billions of dollars) (Proxy indicator of capital flows, base index 2016=100, 12 month rolling averages). 140 200 120 150 100 100 80 50 0 60 -50 40 -100 20 May-16 Jul-16 May-17 Jul-17 May-18 Jul-18 Jan-16 Mar-16 Sep-16 Nov-16 Jan-17 Mar-17 Sep-17 Nov-17 Jan-18 Mar-18 Sep-18 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Source: Economic Commission for Latin America and the Caribbean (ECLAC), on Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of the Central Bank of Chile (Financial Stability Report, second semester the basis of official figures. 2018, EPFR data).

…and increasing sovereign risk in emerging markets EMERGING ECONOMIES: SOVEREIGN RISK ACCORDING TO THE LATIN AMERICA (13 COUNTRIES): SOVEREIGN RISK ACCORDING TO EMERGING MARKET BOND INDEX (EMBIG), JANUARY 2016 - OCTOBER THE INDEX OF EMERGING MARKET BONDS (EMBIG), JANUARY 2016 - 2018 OCTOBER 2018 (Basis points) (Basis points) 550 700 Increase in 650 500 Increase in sovereign sovereign risk risk in Latin 600 in emerging 450 America economies 550 400 500 350 450 300 400 250 350 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Level of the EMBIG index at: 31 Dec. 2015 31 Dec. 2016 31 Dec. 2017 31 Oct. 2018 351 652 Argentina 438 455 203 275 Bolivia 250 83 232 256 Brazil 548 330 117 140 Chile 253 158 173 186 Colombia 317 225 0 0 Dominican Rep. 0 407 459 722 Ecuador 1266 647 Source: Economic Commission for 245 307 Mexico 315 296 Latin America and the Caribbean 0 0 Panama 0 187 (ECLAC), based on figures from JP Paraguay 338 281 200 231 Morgan and information from the 240 170 136 152 Peru Central Reserve Bank of Peru. 280 244 146 185 Uruguay 2807 2168 4854 5803 Venezuela 605 473 419 512 Latin America

Economic growth in Latin America and the Caribbean has slowed, with differences between countries and subregions LATIN AMERICA: GDP GROWTH RATE, FIRST QUARTER OF 2014 TO THE THIRD QUARTER OF 2018 ( Percentages ) 5 4 3 2 1 0 -1 -2 -3 -4 I II III IV I II III IV I II III IV I II III IV I II III 2014 2015 2016 2017 2018 Latin America Mexico and Central America South America Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures.

Economic growth in 2018 is driven by private consumption with a slight increase in the recovery of investment and exports LATIN AMERICA: GDP GROWTH RATES AND CONTRIBUTION BY EXPENDITURE COMPONENTS TO GROWTH, FIRST QUARTER OF 2014 TO THIRD QUARTER OF 2018 ( Percentages ) Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures.

The current account deficit slightly widened in 2018 COMPONENTS OF THE CURRENT ACCOUNT BY SUBREGION LATIN AMERICA (18 COUNTRIES): BALANCE OF PAYMENTS CURRENT ACCOUNT BY COMPONENT, 2009 TO 2018 a Percentages of GDP (Porcentajes del PIB) 2016 2017 2018 4 Mexico and Central America Current transfers balance Current Account -2.3 -1.8 -1.9 Income balance Goods -3.7 -3.4 -4.0 3 Services balance Services 0.7 0.6 0.8 Goods balance Income -3.0 -2.9 -2.9 1.5 2 Current transfers 3.8 3.9 4.2 South America ᵃ 1.2 0.2 1.5 Current Account -1.8 -1.6 -1.9 1.1 1 1.7 1.3 1.5 1.1 Goods 1.6 1.9 1.9 1.1 1.1 0.1 1.1 0.0 Services -1.5 -1.4 -1.6 0.5 0.5 0.0 0.4 0.2 0.1 0 0.2 0.0 0.0 Income -2.5 -2.6 -2.9 -0.5 -0.7 -0.8 -0.9 -0.8 -0.8 0.0 -1.0 Current transfers 0.6 0.5 0.7 -1 The Caribbean -2.6 -1.6 Current Account -6.9 -6.4 -1.9 -1.9 -2.2 -2.5 Goods -13.7 -18.7 -2 -2.4 -2.6 -2.5 -2.6 -2.7 Services 6.0 11.6 -2.9 -2.6 Income -3.3 -4.4 -3.1 -2.9 -2.8 -3 Current transfers 4.3 5.2 -3.0 -3.2 a Excludes Venezuela (Bol. Rep. of). -3.3 -4 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018ᵃ a Values for 2018 correspond to projections. Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures.