IMF says Latin America is less vulnerable to global slowdown

Some friends tease me as an incorrigible optimist when I talk about the new stability and growth of Latin America. They accuse me of partiality because of my passion.
Here is what IMF says... confirming what I have been saying
This is Reuters report of 17 march 2007

" Latin American countries have become less vulnerable than in the past to global slowdowns after strengthening public finances, reducing debt and building reserves, an IMF official said on Saturday.
"The region as a whole has improved ... reduced considerably its vulnerabilities," International Monetary Fund deputy managing director Murilo Portugal told Reuters. "There is a greater resilience now to face external deceleration."
He said many Latin American countries have improved their public finances by reducing debt and substantially increasing international reserves.
A string of weaker-than-expected economic data from the United States has raised concern the economy there may be slowing faster than expected, and that a subprime mortgage crisis could spread to other parts of the economy.
Draft International Monetary Fund forecasts obtained by Reuters earlier this week showed the international body expected global growth of 4.9 percent this year and next after last year's brisk 5.3 percent.
Economists attribute recent improvements in financial stability in Latin America partly to moves by some countries to replace debt in dollars and euros with debt in their local currencies, reducing risk from foreign exchange swings.
A study presented on Saturday by Inter-American Development Bank Senior Economist Andrew Powell at the regional lender's annual meeting in Guatemala showed issuance of domestic debt in Latin America had steadily increased since the 1990s, especially in small countries with limited access to markets."

India's Trade with Latin America in 2006

India's trade with Latin America and caribbean increased to 9 billion dollars in 2006, up from 6 billion in 2005. Highlights:
Brazil remains as the largest trading partner with 2.4 billion dollars of trade, followed by Mexico 1.8 billion, Chile- 1.6 billion and Argentina- 1.2 billion.

While Brazil is the number one destination for our exports, Chile has become the largest exporter to India .

India's exports were 4 billion dollars. Main destinations:
Brazil 147o million dollars
Mexico 1125 ,,
Colombia 346 ,,
Argentina 288 ,,
Chile 164 ,,
Peru 146 ,,
Venezuela 93 ,,
Guatemala 67 ,,
Ecuador 50 ,,
Uruguay 35 ,,

Imports of India in 2006 were 5 billion dollars, up from 3 billion in 2005
Main sources:

Chile 1489 million dollars
Brazil 937 ,,
Argentina 932 ,,
Venezuela 700 ,,
Mexico 671 ,,
Peru 102 ,,
Colombia 63 ,,
Ecuador 50 ,,
Costa Rica 38 ,,

Trinidad and Tobago Business delegation 12 march

CII hosted a meeting at the Intercontinental Hotel, New Delhi with the first and largest-ever Trinidadian business delegation. It consisted of 21 members and was headed by Minister of Trade and Industry Mr Kenneth Valley.

In my speech I highlighted the new Indian business mindset and the difference with the old India using the example of Trinidad itself. About 170 years ago, Indians went as indentured labourers to work in the sugar plantations of Trinidad because at that time India was poor and was ruled by a Colonial power. Today Indian companies are going to Trinidad to invest, create wealth, add value and provide employment. Mittal Steel has invested 1.5 billion dollars. Essar is investing 1.2 billion dollars in another steel mill. T and T has attracted more Indian investment than Brazil or Mexico!. The delegation which has come to India after visiting the dragon(China) and tiger(Korea) can now see the flying elephant ( India) which has the distinction of being the fastest growing largest free market democracy in the world.

The Head of HR and Admn of Essar Steel Caribbean Ltd Mr Prem Singh talked about the positive experience of his company in making the investment in T and T.

High Commissioner Manideo Persaud highlighted the competitive advantages of T and T for Indian investors.

T and T is the gateway to the Caricom region which is integrating towards a Single Market and Economy. T and T is the richest country in the region and its economy is booming with the high oil and gas prices.

El Salvador business meeting 7 February 2007 at Delhi

CII organised a meeting for the El Salvador Foreign Minister Mr Francisco Lainez and his delegation with Indian business at Habitat on 7 Feb at 1.30 pm.

In my welcome remarks in Spanish, I invited the delegation to look at the opportunities arising from the the emerging New India, which has a new mind-set. Addressing the Indian businessmen, I said Indian exporters should try to get atleast one percent of the total imports of El salvador, which were 7.6 billion dollars in 2006. Our exports in 2006 were 20 million dollars. I spoke about our thrust to open up relations and business with Central America countries. The integration of SICA, the Central American regional group involving infrastructure, electricity grids, railways, roads and logistics open up business opportunities for Indian companies. I advised CII to take a business delegation focussed exclusively on central america.The Government of India is giving a 15 million dollar Line of Credit to promote trade with El Salvador,and is setting up a IT training centre.

The Minister invited the Indian companies for bz and investment. The advantages of El Salvador market he quoted are impressive:
-It is one of the three markets which have an investment grade rating, apart from Chile and Mexico
-interest rate of around 7% is one of the lowest in the whole of latin america
-Government offers sector-specific fiscal incentives.
- There are free trade zones for exports.
- telecom, banking and infrastructure are modern
-FTA with USA, Mexico and being part of SICA gives access to these markets
- Indian companies can look at opportunities in agroindustry, footwear, tourism and call-centres

The meeting was presided over by Harinder Sikka, director of Nicholas Piramal, who is planning to lead a delegation to El Salvador

Mr Shashank Bhagat, the Honorary Consul of El Salvador in Delhi who was also in the dais will promote business and interaction between the two countries.

The Minister was accompanied by a business delegation. Mr Poma CEO of the Poma Group of El Salvador is interested in imports of cars and vehicles from india. Poma Group was the second oldest dealer of Toyota in the world ! Hmmm. The first two markets which imported Toyota cars were El salvador and Taiwan !

Latin American and Caribbean economies continue healthy growth in 2006 and 2007

My optimism about the region's stability and growth are confirmed by the December 2006 report of the Economic Commission for Latin America and Caribbean (ECLAC).
Highlights of the report:

- Growth rate in 2006 was 5.3 %, after 4.5% in 2005 and 5.9% in 2004.. Projection for 2007 is 4.7 %.
- Highest growth Venezuela 10%, Dominican Republic 10%, Argentina 8.5% , Peru 7.2 % and Colombia 6%, Trinidad and Tobago 12%
- Brazil's growth in 2006 was 2.8%, projected 3.5% in 2007
- Mexico growth in 2006 was 4.8% , projection for 2007 is 3.8%
- Gross external debt declined to 633 bn dollars from 656 bn in 2005 and 761 bn in 2004. Brazil's debt was down to 156 bn$ from a high of 226 bn in 1999. Argentinian debt was down to 107 bn $ from 171 bn in 2005. Mexican debt was 130bn$ in 2006 down from 166bn in 1999.
- in 2006 Brazil, Argentina and Uruguay repaid their entire debt to IMF ahead of schedule. The level of debt for the region has come down to just 24% of GDP from 42.4% in 2002.
- Foreign exchange reserves increased by 16 % to 295 billion dollars.
- Total exports increased by 21% to 677 billion dollars, while imports increased by 20% to 574 billion dollars. Trade surplus was 103 billion dollars.
- The region produced a surplus on the balance of payments current account for the fourth consecutive year, an unprecedented performance.
- FDI in the region in 2006 was 34 billion dollars, down from 49 billion in 2005. Mexico got 17 billion followed by Brazil 7 bn, Chile 6.6 bn, Colombia 4 bn, peru 3.5 bn and Ecuador 3 bn.
- Inflation was down to 4.8% in 2006 from 6.1% in 2005. Average inflation in the last ten years is 8.45 %. Highest inflation was in venezuela 15.8% followed by Haiti 11.8%, Argentina 10% and Trinidad and tobago 10%. All other countries had single digit inflation.