Category: Latin American Economy

Latin America: Economic Performance In 2016

Latin America: Economic Performance In 2016

After a rough 2015 and 2016, many Latin American expect nothing but growth in their economies. Not shocking, the region’s inhabitants have staged a number of protests in a bid to pressure the government into spurring economic growth through the devising and implementation of strategic economic policies.

“After a rough 2015 and 2016, many Latin American expect nothing but growth in their economies.”

The year 2015 was a year of recession. Many Latin American nationals will obviously live to remember the economic woes that characterized the region during the course of 2015. To some, the year 2015 is by far one of the worst economic downturns that they have seen since the 2008 global recession. The economic woes of 2015 were largely attributed to a decline in revenues for each of the individual countries. This decline in revenue was triggered by the continued normalization of prices in commodities which took place between 2008 and 2010 following the end of the global economic crisis.

But, the year 2016 was not better in any kind of way. As a matter of fact, it was far worse than the year which preceded it. Even though Argentines ushered in a new government in the year 2016, they still had to endure a long spell of poor economic performance as a result of the errors inherited from previous regimes. Both Brazil and Argentina were the worst hit by the economic recession of 2016. In particular, Brazil registered an economic growth which is far worse than what the country had witnessed in 2008 during the global recession.

Experts believe that Brazil is currently in a recession that its government and inhabitants will live to remember for as long as they remain alive.

“An individual look at each of the countries clearly shows that Brazil was the worst hit by the 2016 economic downturn.”

Individual countries considered

An individual look at each of the countries clearly shows that Brazil was the worst hit by the 2016 economic downturn. Heightened fiscal policies along with stiffened monetary policies have accounted for this. Further, little has been done to overturn the effects of the poor economic policies of the previous regimes. For a Brazilian, having to endure the harsh economic downturn of the year 2016 was obviously worse than failing to win the 2014 world cup on home soil. According to experts, the year 2016 marked the onset of a recession that no Brazilian has witnessed over the past four or so decades.

In the light of this, the country’s economy is in a state which is far worse than it has ever witnessed. The country’s corruption crisis has continued to mare economic growth as economic policies fail to take root and impact the country’s economy. Further, both consumer and investor confidence have dropped significantly over the past few years in response to the perpetual decline in economic growth that has characterized the country. Currently, the country’s inflation has skyrocketed along with a decline in consumer spending.

Venezuela did not fare any better despite not being the worst. Its economic woes started after 2014 following the change in commodity prices which came after the 2008 global recession.In as far Venezuela is concerned, it was the oil prices which continued tumbling down throughout the year 2016 as a result of the oil supply glut which characterized the industry. This culminated into a shortfall in the supply of both the consumer and intermediate commodities.

The price and currency control measures which the government put in place also did very little to mitigate the situation. Rather, they spurred inflation coupled with a deterioration of the people’s social welfare.

For Argentina, things have not been smooth simply because of the poor policies left behind by the previous regime. A number of measures have already been put in place to spur economic growth. But, the transition has been somewhat harsh for the local people. Experts believe that the situation will change in the near future especially by the end of the second of 2017.

What economic experts did not foresee

Following the harshness of the economic situation in the Latin American countries, a number of measures had been proposed to cushion against the perpetual decline in the economic performance of the region. But, experts did not foresee the outcomes of most of the economic policies for the year 2016. For example, consumer confidence for Brazil had dropped to a score of 74 for a sixth successive quarter.

Further, job prospects for all the countries in the region declined significantly with Brazil and Argentina both registering the highest drops.

Latin America And Its Relations With China And The US

Latin America And Its Relations With China And The US

In a world where existing independently is virtually impossible, there is every need to be in close relations with the people around you. This principle actually applies to countries as well. The Latin American community is fully aware of the need to have close relations with the international community. But, the international community comprises many entities.

Much as it is vital to have close ties with almost every country on the planet, there are certain countries that every country cannot afford to be in bad terms with. In particular, having close ties with the US and China is important to any country on the earth.

The Latin American community is fully aware of the need to cement its ties with both the US and China. In a bid to understand the stance of Latin American nations on the issue of having smooth relations with both China and the US, the passage discusses a number of important topics patterning to this subject.

Latin America and China

“China is an important figure in the affairs of the world.”

China is an important figure in the affairs of the world. Its economy plays a huge role in the sustenance of the global economy based on its notable contribution to the world’s economy. Not shocking, the Chinese government had played an instrumental role in reviving the European economy following the recent European economic crisis. Also, china had helped the US to get back on its feet following the 2008 global financial crisis. Africa has also benefited greatly from foreign direct investment from China. There are numerous benefits that come with having close ties with china and the Latin American community is fully aware of this. China believes that it can also benefit greatly from having smooth relations with the Latin American region. It is safe to say that the relationship that exists between the two is a symbiotic one. China’s commitment to the cementation of relations with the Latin American nations is highlighted in China’s Policy Paper on Latin America and the Caribbean.

“The US has focused on migration concerns along with the sale of illegal drugs by immigrants from Mexico and Columbia.”

Latin America and US

Like china, the US is an important nation in both economic and political affairs of the world. As the world superpower, it remains one of the world’s most important nations. The US and China benefit greatly from Latin American nations. In the recent past, relations between the US and Latin America has not been as strong as it was in the past. Most notably, the US has focused on migration concerns along with the sale of illegal drugs by immigrants from Mexico and Columbia. But, the Task force which was initiated by the government to asses the relationship between the US and Latin America has recommended the need to focus on fostering development in the Latin American region. This is even going to become more important in the near future as the construction of the Mexico boarder looms coupled with a significant number of moves patterning to ranging from travel bans to business limitations.

A recent move by Eduardo to grant asylum to an anti-US official is likely to affect trade between the two nations. This is a perfect example of how relations between the US and Latin America have suffered over the years.

Are Latin American Countries Developing More Advanced Economies?

Are Latin American Countries Developing More Advanced Economies?

Latin American countries had seen the worst economic performance in 2015 following the onset of the recession. It is understood that the region fared far worse than it has ever done in the past ten years.

“Latin American countries had seen the worst economic performance in 2015.”

Economic experts around the globe attributed the decline in economic growth in most Latin American countries to a drop in commodity prices, poor governance and lack of growth oriented economic programs. Even Venezuela which had been doing quite well by the summit of 2014, also failed to impress both during the onset of 2015 and towards the end of 2016. Generally, the year 2016 was far worse than what most economic experts had expected. Here is a general overview of what could have led to the deteriorated economic growth in the Latin American region.

Understanding the situation on the ground

According to information on the economic growth pattern of the region for the year 2016, it is clear that the region witnessed a much worse economic downturn than most economic experts had expected.  Even though the region’s economic growth had literally stagnated during the whole of 2015, the year 2016 still promised better things. Economic experts within the region had a better outlook than what they witnessed in 2016.

Expert sources show that the region’s economic growth contracted by around 0.7 %. This is by far worse than what was forecasted earlier in the year.As things stand, countries like Brazil and Argentina are still in the deep waters of the 2015 economic recession.

Brazil in particular, is experiencing an economic situation which is far worse than what it witnessed in 2016 as the country’s currency continues to depreciate along with low investor confidence and consumer spending.

In as far GDP growth is concerned, the region fared quite badly. Economic data shows that the region fared the worst in this area after its GDP declined by over 0.2 %. Compared to other regions in the world, this was the worst performance of the year 2016. Even sub Sahara Africa recorded a much better GDP (about 4 %; this was the 3rd best GDP growth in the world) for the year 2016 than Latin America. This is the current situation on the ground. The three major countries in the region are all fighting to lift themselves out of the current mess using various measures.

“A number of economic experts believe that the region’s failure to emerge out of the 2015 recession was largely caused by poor economic policies.”

Poor past economic policies

A number of economic experts believe that the region’s failure to emerge out of the 2015 recession was largely caused by poor economic policies. Major economies in the region including Brazil, Argentina and Venezuela had been found to be culprits of poor economic policies which had been structured and implemented by previous regimes. The effects of such past policies had resurfaced and began to haunt the economies of these great Latin American nations.

To be more precise, experts strongly believe that the recession which was witnessed by the region was largely due to the past economic policies especially those which were implemented during the post 2008 global recession era. Argentina is the major culprit in this regard having just ushered in a new government last year following the expiration of the former regime’s tenure. The new government took over both macroeconomic and microeconomic imbalances which had been left behind by the previous regime.

For example, Brazil and Argentina both failed to deal with the depreciation of their currencies against the US dollar. Like most Latin American countries, they chose to depend on tightening their fiscal policies. This was also replicated by Venezuela which not only tightened its fiscal policies, but also went on to stiffen its monetary policies. All the countries in the region which followed suit gradually saw a sharp drop in their economic growth rates.

What lies ahead?

This is the question that everyone is asking. The contracted economic growth that has characterized the region is not new to the rest of the world. But, the right measures have to be put in place to dismiss it before things become worse. Argentina and Brazil both share the same economic woes, even though Brazil appears to be in a much worse situation. Venezuela’s growth has equally stalled although recent measures appear to be yielding the government’s desired results.