Which country is the largest importer in Latin America? Not Brasil, even though it is the largest market of the region. Mexico's imports in 2012 were 371 billion dollars as against Brasilian imports of 223 billion. India's exports to Mexico were 2950 million dollars which is just 0.8% of the total Mexican imports. Indians need to focus more on Mexico, which has a more open market with liberal import policies while Brazil is relatively more protective. India's exports to Brasil in 2012 were 5042 million dollars. But forty one percent ( 2.1 billion) of the exports were diesel oil. The Brasilian imports of this will come down and stop with the ramping up of Brasilian refining capacity soon. In the case of Mexico, the exports of India are well diversified with engineering products, chemicals, pharmaceuticals and textiles.
The third largest importer in Latin America is not Argentina, which is the third largest economy of the region. Chile has emerged as the third largest importer in 2012 with 75 billion dollars, overtaking Argentina's imports of 69 billion dollars. In 2012, India's exports to Chile were 658 million dollars which is 0.87% of Chile's total imports. Chilean population is just 17 million while Argentina has 40 million people. The Argentines keep imposing new and arbitrary import and foreign exchange restrictions taking the country to the old and outmoded license raj system. But the Chileans have the most open economy with a single uniform tariff of just six percent on imports.
Many Indian exporters think that the central american markets are too small for their attention. They need to know that the total imports of the eight countries which form the central american integration group SICA were 94 billion dollars in 2012. Panama is number one importer with 24 billion dollars followed by Costa Rica- 18 bn, Guatemala-17 bn and Dominican Republic- 15 billion. If the Indians target one percent of the total imports of Central America, the exports would amount to almost a billion dollars !
India should target 20 billion dollars of exports to Latin America by 2017 from the 12 billion dollars in 2012. This is a realistic target in the light of the new paradigm of the market of Latin America which continues to grow with solid macroeconomic fundamentals, as seen from the latest ( 23 April 2013) report of the Economic Commission for Latin America and Caribbean ( ECLAC). Some highlights of the report:
-Latin America's total trade had increased to 2151 billion dollars in 2012 from 2092 bn in 2011. The regions' exports increased to 1090 bn $ from 1074 bn while imports increased to 1061 billion dollars in 2012 from 1018 bn in 2011.
- The GDP of the region is projected to grow by 3.5% in 2013.
-Paraguay will be the topper of the Latin American chart of GDP growth in 2013 with 10%. Paraguay was the topper in 2010 too with 13.1%.
-Panama will have the second highest growth of 8%. It had the highest growth (over 10% ) in 2012 and 2011 as well as in 2008.
-Peru will have the third highest growth of 6%. Peru has emerged as a consistent high growth country in recent years. Its annual average growth from 2003 to 2008 was an impressive 6.9%
-Brasil is expected to grow by 3% and Mexico by 3.5%, Argentina by 3.5%, Colombia-4,5%, Chile-5%, Venezuela-2%. Central America is projected to grow by 4.3%.
-In 2012 the actual growth of the region was 3%. Domestic demand continued to be the main driver of growth, sustained by solid labour market indicators and credit expansion.
-Average inflation rate for the region in 2012 declined to 5.6% from 6.8% in 2011.Venezuela which had the highest inflation of 29% in 2011 had brought it down to 19.5% in 2012.
-The favourable labour trends that marked much of the last decade in the region continues. Urban open unemployment rate went down again, from 6.7% in 2011 to 6.4% in 2012, the lowest in the last twenty years. Brasil has the lowest unemployment rate of 5,5% in its recent history.