After several years struggling, there is glean hope that the economy of Latin America will stabilize if figures for 2017 and the expected future outlook is anything to go by. Since 2014 it’s only last year that we have seen such a remarkable growth, for instance, the last quarter of last year the region’s GDP grew by 2.3%. There have been several factors which can be attributed to such positive outlook. Looking at individual countries could reveal efforts to bail out the economy from the woods. Brazil which is a major player in Latin America’s economy had the central bank ease monetary policy after the fall of inflation in Q4.
Chile’s new President Sebastián Piñera seems to be development conscious; a move to retain Felipe Larrain as the Finance minister seems to be a good one and which analysts have applauded. Lerrain is celebrated for the role he has played for a robust economic growth in Chile. But the road ahead is not all rosy as the passing of legislation could stand in the way as politics come into play.
The political situation in Ecuador could mean something to the economy. President Moreno after consolidating power can now move without many hiccups and pass legislation which could affect the economy positively. We can only wait and hope for the best in Colombia who are now warming for their elections to be held between March and May 2018.
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Analysts are optimistic that the economy of Brazil will continue registering positive results. The accommodative monetary policy and improved confidence being part of the reasons for optimism. Figures reported for Q4 last year can only affirm the situation on the ground, as now there’s a rise in consumer sentiments. This year economists project that the economy will grow by 2.5% rising to 2.6% in 2019. There is, however, some worry due to the political situation in the country especially as we draw near to the October elections. This uncertainty could generate volatility in the country’s exchange rate and financial markets. Brazil is Latin America’s largest economy but could soon take a back seat due to slower growth.
All is not well in Mexico, as the country continues to struggle with consumer sentiments deteriorating by the day. The economy is badly affected by the effects of the high inflation, tighter monetary condition, and fiscal consolidation. GDP estimates show that the last quarter of 2017 the economy registered a growth of 1.8%. There has reported shrank in retail sales and rise in unemployment. The government has not been spared either and it had to scale down infrastructure projects. Probably after the elections, things could change but so far analysts project that in 2018, the economy will grow by 2.2%.
This is a country that seems to be affected by a widening current account making its economy venerable to external shocks. The situation is also affecting the local currency and the ballooning external debt obligations. Currently, the currency is experiencing further depreciation a time when a number of subsidies for basic products continue to be slashed. Though inflation continues to rise, it’s expected that the government will continue tightening its spending though and still rely on international debt to finance its fiscal spending. A growth of 3 % is however projected in 2018 and a fast economic growth expected in the next two years due to solid growth in fixed investment.
There was a mixed data for the final quarter of 2017. There was a turnaround in the retail sector as we saw lower unemployment and subsequent improvement in consumer confidence. But other areas like car sales saw contraction. The trade deficit narrowed due to rise in exports and contraction of imports. These are some of the areas that will continue driving the economy of Columbia this year. It’s expected that growth in private consumption, moderate inflation, higher fixed investment and growth in exports will continue spurring economic growth to a higher new level. The economy is expected to grow at 2.6% in 2018. But if political tensions are amplified due to this year’s elections, it could see the economy badly affected.
The economy of Spanish speaking Latin America is currently not as bad as it was two years ago, there’s a remarkable improvement and the future seems better. Nevertheless, politics seems the biggest impediment to economic growth and how well the region plays politics will have an effect on the future economic outlook of the region.