Latin American economic overview - February 6, 2007
Argentina:
GDP: + 8.5% for first 11 months of 2006. For the whole year, growth is expected to come in at under 9.0%. It will be the fourth year in a row with a growth rate of over 8%. The forecast for 2007 is for a growth rate of 7.0%.
Consumer Prices: + 9.8% in December 2006 for the previous 12 months
Industrial
Production: + 8.3% in 2006, driven largely by the
automotive sector which gained 32% last year
Unemployment: 10.2% in December 2006
Trade Balance: + $12.4 billion in December 2006 for the previous twelve months
Currency: Peso 3.11 for US$1 as of January 31 (Peso 3.06 for US$1 a year ago)
Steel
Production: 5.5 million mt in 2006 (compared to 5.4 million mt in 2005) - Number 28 in the world
Special Note:
Argentina continues to repay its debt incurred during the economic crisis of 2001. An agreement with
Spain was signed for the repayment of $783 million at an interest rate of Libor + 1.4%.
Brazil:
GDP: + 3.2% in Q3. Growth for 2006 is expected to be not much more than 3.0%. Initial forecasts for 2007 are around 3.7%, even though President Lula wants to propose special infrastructure projects to lift the growth rate to 5%.
Consumer Prices: + 3.1% annual rate in December; estimates for 2007 show another moderate rate of 3.7%.
Industrial
Production: + 4.2% in November 2006
Unemployment: 8.4% in December 2006
Interest Rate: On January 24, the benchmark overnight interest rate was lowered by .25% percent to 13.0%.
Trade Balance: The surplus tumbled to $2.49 billion in January (compared to $5.01 billion in December). However, for 2006 a record surplus of $46.1 billion was achieved.
Currency: Real 2.13 to US$1 as of January 31 (Real 2.21 to US$1 a year ago)
Steel
Production: 30.9 million mt in 2006, number 10 in the world
Chile:
GDP: + 2.9% annual rate in Q3 2006. For the year, a growth rate of 4.2% is expected, and for 2007, a 5.3% rage is expected, provided that no accidents or major strikes happen in the copper industry.
Consumer Prices: + 2.6% annual rate in December 2006 (compared to 3.7% in 2005)
Industrial
Production: + 1.2% in December 2006
Unemployment: 6.0% in December 2006
Interest Rate: On January 11, the benchmark overnight interest rate was cut by .25% to 5.0%.
Trade Balance: + $22.1 billion for 2006
Currency: Peso 544 to US$1 as of January 31 (Peso 528 to US$1 a year ago)
Steel
Production: 1.6 million mt in 2006 (1.5 million mt in 2005) - Number 44 in the world.
Venezuela:
GDP: + 10.2% in 2006
Consumer Prices: + 17.0% in 2006 (14.3% in 2005); this month the situation worsened with consumer prices rising 18.5% for the previous 12 months. In the period of 2000-2006, food prices increased 380% with a consumer price index of 233%.
Unemployment: 8.4% in December 2006 (8.9% in 2005). Unofficial estimates put the unemployment rate closer to 10%.
Trade Balance: + $36.8 billion in Q3 2006 for the previous 12 months; imports rose 32% in 2006 to $31.3 billion.
Currency: The official rate is Bolivar 2,147 to US$1; right now the “unregulated market” has a rate of around Bolivar 4,500.
Steel
Production: 4.9 million mt in 2006 (unchanged from 2005) - Number 34 in the world
Special Concerns: There are many. Inflation is one of them. Others concerns include President Chavez' power to rule by decree for 18 months and his intention to take away the autonomy of the Central Bank. The first cases of nationalization will definitely not help foster investor confidence as regards
Venezuela. Even though the government said it would pay for the nationalized companies, it will be below the market value and will not be subject to negotiation. This is what transpired during the current proceedings against the telephone company CANTV. US based Verizon owns 28.5% of this company.