Latin America – Economic Outlook

May, 2015

Patricia Krause

Latin America – Breakdown

Others

Ecuador

Peru

Venezuela

Chile

Colombia

Argentina

Mexico

Brazil

8%

2%

4%

4%

5%

7%

11%

22%

39%

Regional GDP Composition (Latam and Caribbean – 32 countries)

8 countries contribute with 92% of regional GDP

Global representativeness: 8.3% of world GDP

Source: IMF

Macro fundamentals improved in

recent decades

Major commodity exporter

Poor infrastructure

Lower commodity prices

Freefall oil prices

Strengthening US dollar

Features vs Current Scenario

2015 - Sluggish and Uneven Growth

5.4% 5.5%

3.8%

-1.3%

6.1%

4.2%

2.7% 2.7%

1.3%

-4,0

-2,0

0,0

2,0

4,0

6,0

8,0

2006 2007 2008 2009 2010 2011 2012 2013 2014

Latin America Pacific Countries Mercosur

Source:National Statistic Institutes

Exports – Dependence on Exports

Latam Exports as a share of GDP Commodities as a share of Latam Exports (%)

0

10

20

30

40

50

60

70

80

90

Mexico Brazil Argentina Chile Colombia Ecuador Peru

Mining/Metals Agro Oil Exports

Mexico Chile Ecuador Peru Colombia Argentina Brazil

31% 29%

27%

19%

14% 13%

10%

Strong Currency Depreciation

Currencies vs USD (% from 30/04/2014 – 30/04/2015)

Where it comes from?

Impacted by the US dollar recent strengthening

Lower commodities prices

Notably stronger in Brazil due to confidence crisis

Who could be benefited by the strong depreciation?

Manufaturing industry

Latam Main Commodities

Price Variation 1 Year 5 Years

Iron Ore -50% -67%

Crude Oil (Brent) -48% 34%

Soya -34% 0.6%

Copper -11% -23%

Sources:Indexmundi and CentralBanks

Brazil Colombia Mexico Peru Chile

-33%

-24%

-18%

-11%

-8%

Lackluster manufacturing segment

-6

-4

-2

0

2

4

6

8

10

12

jan/14 feb/14 mar/14 apr/14 may/14 jun/14 jul/14 aug/14 sep/14 oct/14 nov/14 dec/14 jan/15 feb/15

Colombia

-15,0

-10,0

-5,0

0,0

5,0

10,0

jan/14 feb/14 mar/14 apr/14 may/14 jun/14 jul/14 aug/14 sep/14 oct/14 nov/14 dec/14 jan/15 feb/15

Peru

0

1

2

3

4

5

6

7

8

feb/14 mar/14 apr/14 may/14 jun/14 jul/14 aug/14 sep/14 oct/14 nov/14 dec/14 jan/15 feb/15 mar/15

Mexico

-10

-8

-6

-4

-2

0

2

4

6

feb/14 mar/14 apr/14 may/14 jun/14 jul/14 aug/14 sep/14 oct/14 nov/14 dec/14 jan/15 feb/15 mar/15

Brazil

-6,0

-4,0

-2,0

0,0

2,0

4,0

6,0

feb/14 mar/14 apr/14 may/14 jun/14 jul/14 aug/14 sep/14 oct/14 nov/14 dec/14 jan/15 feb/15 mar/15

Chile

Poor Infrastructure undermines the manufacturing segment

Investment Rate (%)

Sources:IMF and World Economic Forum *data from the Survey of 2013-2014 (148 countries)

Quality of Infrastructure

Peru

Colombia

Argentina

Ecuador*

Brazil

Panama

Chile

89

88

84

79*

76

46

49

91

75

72

94

71

40

35

2006 (sample: 125 countries) 2015 (sample: 144 countries)

15,0

17,0

19,0

21,0

23,0

25,0

27,0

29,0

31,0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*

Argentina Brazil Chile Colombia Equador Mexico Peru

Up to now controlled current account deficit

The Fed rate hikes will have a negative impact on capital flows into the region

Sources:National IMF and Central Banks

Argentina Brazil Chile Colombia Ecuador Mexico Peru

-0,9%

-3,9%

-1,2%

-5,2%

-0,6%

-2,1%

-4,1%

1,0%

2,9%

8,5%

4,2%

0,8%

1,8%

3,7%

Current Account (%of GDP) Foreign Direct Investment (% of GDP)

GDP Forecast Along the Region

Sources:Coface

Argentina Brazil Chile Colômbia Equador México Peru Venezuela

2.9% 2.7%

4.2%

4.9% 4.5%

1.4%

5.8%

1.3%

-1.5%

0.1%

1.9%

4.6%

3.8%

2.1% 2.4%

-3%

-1% -0.5%

2.5%

3.8%

1.5%

3.1%

4.2%

-7%

2013 2014 2015

Country assessments: Latin America economies

11

2011 2012 2013 2015

March March March March June October December March

Chile A2 A2 A2 A2 A2 A2 A2 A2 A2

Brazil A3 A3 A3 A4 A4 A4 A4 A4 A4

Colombia A4 A4 A4 A4 A4 A4 A4 A4 A4

Mexico A4 A4 A4 A4 A4 A4 A4 A4 A4

Panama A4 A4 A4 A4 A4 A4 A4 A4 A4

Peru A4 A4 A4 A4 A4 A4 A4 A4 B

Uruguay A4 A4 A4 A4 A4 A4 A4 A4 A4

Ecuador C C C B B B B B C

Argentina C C C C C C C C C

Bolivia C C C C C C C C C

Paraguay C C C C C C C C C

Venezuela C C C C C D D D D

Country

Assesment

2014

Business

Climate

Latam – Sectoral Assesment

Sectorial Assesment October 2014 March 2015

Agro-food

Retail

Textile-clothing

Metals

Automotive

Construction

Chemicals

Pharmaceuticals

Moderate risk High risk

Medium risk Very high risk

THANK YOU!