TORONTO, July 18, 2012 /CNW/ - Latin America continues to grow despite
signs of moderation in some of the region's economies, according to
Scotiabank's Latin America Regional Outlook, Summer 2012 report.
"The core group of countries in the developing Americas is not immune to
the heightened financial turmoil present in Europe, decelerating growth
dynamics in Asia and the sluggish recovery in North America," said
Pablo Bréard, Vice-President, Head of International Research,
Scotiabank. "The pace of growth is uneven, with marked differences
between the U.S.-linked countries in North and Central America and the
more Asia-influenced, domestic-driven economies in the South."
Brazil, the world's seventh-largest economy, will initiate a new phase
of sustained economic growth following a marked slowdown in industrial
activity during the second half of 2011, the regional outlook report
states. Mexico remains on a solid economic growth path due to its close
link to the U.S. industrial and monetary cycles and growing domestic
demand in an electoral year.
Colombia, Peru and Chile also enjoy similar rates of economic expansion
strongly influenced by commodity export markets and steady access to
domestic credit. Meanwhile, both Venezuela and Argentina are poised for
steep economic contraction, courtesy of ill-defined and erratic policy
"Inflation is not an issue of material concern in the majority of Latin
American economies," said Mr. Bréard. "Those countries which embraced
inflation-targeting schemes are reaping the benefits of manageable
price pressures which help offset adverse movements in global currency
Latin America is in relatively better fiscal shape than the U.S. and
Europe. Most countries in the region, even those which are adopting
inconsistent policy options like Argentina or Venezuela, enjoy a
manageable fiscal deficit position, prompting the state to play a more
dominant role in adopting pro-growth stimulus strategies. The region's
overall debt profile has steadily improved, raising the prospects for
credit rating upgrades.
"The steady development of local sources of finance through enhanced
banking sectors and well-regulated local-currency bond markets has
sharply diminished the need to access external - private or
multilateral - sources of financing," added Mr. Bréard. "Long-term
equity investors continue to see enormous potential in thriving sectors
connected either to infrastructure or to the development of vast energy
and mineral resources."
Latin America continues to show progress in developing democratic
institutions and a more predictable policy environment, according to
the Scotiabank Economics report.
"Brazil's growing regional leadership, Mexico's enhanced party-based
political system, improved bilateral relations between Colombia and
Venezuela, regional integration amongst economies in the Pacific and
the increased professionalism of regional central banks are some of the
structural advances that will transcend the still-fragile global market
context," added Mr. Bréard. "Nevertheless, new issues of concern have
emerged which require decisive consensus-based action by national
Scotiabank's global economic research unit provides clients with
in-depth research into the factors shaping the outlook for Canada and
the global economy, including macroeconomic developments, currency and
capital market trends, commodity and industry performance, as well as
monetary, fiscal and public policy issues.
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