To many South American leaders, Chinese Premier Li Keqiang’s visit this week couldn’t come at a better time, and from a better country. China has been busy with Latin America, surpassing the United States as South America’s leading export destination outside of the region, according to the China-Latin America Economic Bulletin.
What is more, the ink is barely dry on big loan agreements to Venezuela and Ecuador, or a major China-Latin America cooperation plan signed in January that pledges to increase trade by $500bn and investment by $250bn and to cooperate on science and technology, trade, and environmental protection. Read more
Not long ago, the world praised Chile as an exception among South American nations. We were the classic “star pupil”, the guy who is definitely not popular at school: instead of playing fine soccer, instead of dancing joyfully, we concentrated on homework. Nowadays, any observer of Chile’s reality can easily deduce that our glories have withered to a failed experiment, rather than blooming as a role model. Pushing the allegory further, the once brilliant student has ended up shoplifting and smoking dope. Read more
Some honeymoon Michelle Bachelet has had. Her second presidency was welcomed in by a powerful earthquake in the Atacama desert, followed shortly afterwards by a raging fire in Valparaíso, while most recently a spate of terrorist attacks has been disturbing Chile’s normally relatively tranquil populace.
All this as the economy sputters to its slowest rate of growth since Chile was last shaken by a major earthquake in March 2010, with the central bank confirming the downward trend on Monday when it announced year-on-year economic growth in August of just 0.3 per cent. Read more
South Korean carmakers are up in arms over Chile’s proposed bill to impose an environment tax on diesel vehicles, which is likely to hit Korea’s car exports to the Latin American country and cause diplomatic friction.
Chile is one of the key export markets for Korean automakers such as Hyundai Motor and its affilate Kia Motors, both making rapid inroads into emerging markets. Korean cars are the best-selling imported vehicles in Chile, with 30 per cent of the country’s fast-growing auto market. Read more
By Samuel George of the Bertelsmann Foundation
When the presidents of Chile, Colombia, Mexico and Peru meet on June 19 and 20 for the ninth Pacific Alliance summit in Nayarit, Mexico, they’ll likely debate a proposal that could transform their quietly successful pact while boosting Latin American unity.
At the urging of Chile’s Michelle Bachelet, the gathering is expected to broach the potential integration of the Alliance, which was formed among the four countries in 2012, and Mercosur, an older grouping that includes the regional heavyweights of Brazil and Argentina. The issue would represent a crossroads for the Alliance, however, since Mercosur does not generally share the enthusiasm for international trade shown by its neighbours on the Pacific coast. Read more
It’s not often a country’s president flies more than 1,000 miles to inaugurate a gas storage tank – more of a job for the local mayor, you might think. But that’s what Michelle Bachelet, Chile’s president, has just done: in a country as energetically-challenged as Chile, a new gas tank is a big deal.
This one, the biggest in Latin America, represents one more step in Chile’s efforts to solve its chronic energy shortfall once and for all. Read more
Latin America has been one of the great beneficiaries of the commodities supercycle of recent years. With the peak in that boom behind us, what is Latin America to do?
Structural reform, says Alejandro Werner, Western Hemisphere director at the IMF. As he told beyondbrics:
High growth in the last 10 years had a side effect – maybe [Latin America] didn’t push as fast as expected in structural reforms.
The Pacific Alliance is all the rage in Latin America. As today’s FT special report shows, the members of this newly-formed free trade pact include some of the region’s best-managed and most reform-minded economies: Chile, Colombia, Mexico and Peru. These countries do not represent some kind of Platonic ideal. They suffer problems aplenty. But their governments do pride themselves on hard-nosed business dealing rather than gassy ideology. That being the case, is there a way for portfolio investors to actually trade the idea? Read more
With little more than a week left of his presidency, Sebastián Piñera is fighting on to the last.
On the anniversary of one of the most powerful earthquakes on record wreaking havoc in Chile just days before he came to power four years ago, Piñera trumpeted his government’s record in cleaning up the mess yesterday.
However much opponents may accuse him of massaging the numbers, with 97 per cent of the infrastructure destroyed now rebuilt according to official figures, it seems fair to say that Piñera did a decent job in keeping his promise to fix the problems by the end of his term. Read more
It has been a while coming but after a UN ruling on Monday it is finally time for Chile and Peru to put their maritime differences behind them.
The International Court of Justice in The Hague has given Peru a chunk of the Pacific Ocean it did not have before, while Chile has retained its rich coastal fishing grounds. So, despite smug smiles and gnashing of teeth in some corners of both countries, what looks like a split sovereignty ruling should reinforce the pledge Peru and Chile have made to remain good neighbours. Read more
What a difference a mountain range makes. To the east of the Andes, Argentina is in the throes of an old fashioned, disorderly devaluation, in which authorities scramble to plug every leaking channel of hard currency flows until at last they are carried off in the flood. To the west, Chile’s authorities are looking on with calm equanimity as their currency gently subsides to its own level.
What is it, other than snow-capped peaks, that unites and separates their two worlds? Read more
Michelle Bachelet, Chile’s president elect, might well be excused for thinking she’s under fire from a new Triple Alliance.
In the next few days she can expect a binding court ruling that threatens to extend Peru’s maritime border into Chilean territorial waters. Meanwhile, landlocked Bolivia hasn’t given up its dream of a corridor through the Atacama Desert to the Pacific (though it must now do without the late Hugo Chávez’s boisterous support). And Argentina is suddenly making noise about wanting its own door to the world’s biggest ocean. Read more
An IMF research paper shows how rare Latin American financial crises have been since 1998, when the world was rocked by EM currency crises. We’ve graphed the findings below.
Carlos Vegh and Guillermo Vuletin, the authors, think the continent has learnt from 1998. Successful countries like Brazil, Peru and Chile have stimulated their economies when GDP dipped; before 1998, they were less keen to do so. Read more
Research company Wealth-X has released its annual report on “ultra high net worth individuals”. (For those prefer plain English, they mean the stinking rich.)
The super wealthy in the west have got even richer over the past year. In fact the super rich have got richer just about everywhere – bar in eight emerging and frontier countries including China, Brazil and Syria. Read more
Michelle Bachelet (pictured) is well on her way to returning to the Chilean presidency after winning 46.7 per cent of the votes in the first round of the country’s presidential elections on Sunday.
But while the 62-year old former pediatrician is expected to win the second round run-off on December 15 by a comfortable margin, she is also set to inherit an economy that is much less robust than the one she presided over during with her previous stint in 2006-2010. Read more
Latin America is home to four of the five most violent countries in the world.
For an area of the world significantly richer per head than Africa and something of a hot spot for investors, this is damning.
The high crime rates are not just limited to drug-ridden basket cases like Honduras and Guatemala, either. In Brazil and Chile, crime is hitting growth, deterring business and swelling government coffers, according to a UN report released on Tuesday. Read more
He's behind you
FT readers will know that Latin America’s GDP growth is tied to the Chinese economy. If Chinese output dips, this usually reduces growth estimates for Chile and Brazil, owing to their high trade volumes. Lower Chinese demand for copper, soya and iron ore – among other goods – hits both economies.
Commentators see Mexico as a separate case. Mexico exports large amounts of manufactured goods to the US, just like China. Its economy is often thought to be little impacted by revisions in Chinese GDP figures.
Or is it? Read more
Better safe than sorry? Chile on Thursday unexpectedly cut its benchmark interest rate by 25bps to 4.75 per cent on Thursday. It’s its first rate cut since January 2012.
Although economic growth for the country – forecast at between 4-4.5 per cent for this year – is still the envy of the region (Mexico and Brazil by contrast are expected to grow 1.7 per cent and 2.4 per cent respectively), it has weakened from previous estimates of 4-5 per cent. Read more
Investors have got used to the idea that Brazil’s economy is not delivering on its post-crisis promise and that Chile, Peru, Colombia and Mexico are where future growth lies.
But how upbeat are consumers in those countries? A survey commissioned by LatAm Confidential, a new service from the Financial Times launched this week, throws up some surprising results. Read more
For Barrick Gold, there was a silver lining to the Chilean Supreme Court’s decision on Wednesday to uphold the suspension of the construction of its giant Pascua Lama mine.
The Toronto-based company will at least not be required to apply for a new environmental permit for the $8.5bn project, which sits high up in the Andes on the border with Argentina. Read more