Latin America | 1st Quarter 2014
Latin America’s export trade is growing but the drop in the forecast is a function of declines the outlook for trade in 2014 compared to 2013. In particular, the forecast for Brazil in 2014 is 7.5% compared to growth of 8.6% in 2013 and for countries like Peru the drop is even larger, from 8.5% to 6.5% growth. The region is currently prone to political instability and the slow down in exports is a function of this alongside restrictive import policies that have been followed through by some countries, like Argentina. As a result, imports are also forecast to drop. There are two drivers of Latin American trade: demand for copper and oil in emerging Asia in particular and its role in global supply chains. If China’s slowdown becomes a hard-landing, copper exports to China from Brazil and Peru in particular will be threatened and this in itself can explain the drop in the forecast. However, the uncertainty in markets, particularly recently triggered by Venezuela’s decision to halt economic relations with Panama and by Argentina’s economic mismanagement, has also caused our forecast to be downgraded rapidly over the past few months, from 7.2% in our Q4 2013 forecast to 3.6% now.