India’s exports have increased to Latin America in 2018

  

India’s exports to Latin America have increased by 13.3% to 10 billion dollars in the first three quarters of 2018 as against 8.87 billion in the same period in 2017. Vehicles were the leading item of exports with 2.8 billion dollars. 

Although exports to the top markets Mexico and Brazil have declined slightly in 2018, this has been offset by the increase in the exports to Colombia, Chile, Peru Argentina and the other countries in the region. 

Exports to Mexico were down to  2.6 billion in 2018 from 2.8 billion in 2017. Exports to Brazil decreased to 2.1 billion in 2018 from 2.4 bn in 2017. But the exports to Colombia have increased to 797 million dollars in 2018 from 657 m in 2017; Chile 696 m in 2018 from 536 m in 2017; Peru 581 m in 2018 from 530 in 2017; Argentina 530 m in 2018 from 519 m in 2017; Ecuador 241 m from 197 m and; Guatemala 227 m from 196 m.

India’s imports from the region have also gone up by 14.4% to 19.5 billion dollars in the first nine months of 2018 as against 17.04 billion in the  same period last year. The increase is mainly due to the increase in crude oil prices. Crude oil accounted for fifty percent of the imports. Gold imports have increased to 3.35 billion in the first nine months of 2018. The third most important item was soy oil worth 1.8 billion followed by 1.55 bn of copper.

Sterlite and Sterling & Wilson (of Shapoorji group), KEC and Karamtara of India have got about two billion dollars of power transmission and solar projects in Brazil in 2018 and all of them are upbeat about more contracts and investment in the region. Aditya Birla Group and UPL who have large investments in the region have done well in 2018 and have plans for expansion of business.

The Latin American investment in India has gone down after the sale of Brazilian Gerdau’s steel plant in India for about 120 million dollars. However, the Mexican company Cinepolis continues to invest and has increased the number of multiplexes in India.

The increase in India’s trade with Latin America is creditable given the fact that the region has had a modest GDP growth of 1.1% in 2018. The growth is projected to increase it to 1.7% in 2019, according to the December annual report of the UN Economic Commission for Latin America and Caribbean. Brazil is expected to improve its growth from 1.3% in 2018 to 2% in 2019 while Mexico’s growth rate is expected to decline slightly to 2.1% from 2.2% in 2018. Next year, Dominican Republic is expected to have the highest growth rate of 5.7%, followed by Panama 5.6% and Bolivia 4.3%. Peru’s growth in 2019 is projected at 3.6% and that of Chile 3.3 and Central America 3.3%.

The region’s imports are estimated to have grown by 12% to 1045 billion dollars while exports expanded by 10% to 1050 billion.

During the first ten months of 2018, average inflation in the region rose from 5.3% in October 2017 to 7 % in October 2018, which is quite reasonable by Latin American standards. The only exceptions are Argentina and Venezuela. Argentina’s inflation has doubled from 22.9% in October 2017 to 45.5% in October 2018. Venezuela has stopped publishing inflation data and it is estimated to be in five digits.

The ratio of the external debt to gdp of Latin America has remained at a healthy 37% with 842 billion dollars of reserves while external debt is 1873 billion.

Three out of the 19 countries in the region are forecast to suffer negative growth in 2019. These are Venezuela -10% ( better than the 15% contraction in 2018), Argentina -1.8% ( worsening from 2.6% contraction in 2018) and Nicaragua -2% (better than the 4.1% contraction in 2018).

Venezuela has suffered 55% GDP contraction in the last five years. The country, which used to attract over a million Colombian and other South American workers, has seen emigration of almost three million Venezuelans as refugees. The ruling Chavista regime has no clue or competence to stop the deterioration of the economy and the country continues in the path of self destruction hopelessly.

Nicaragua is moving towards political uncertainty and economic strain due to the authoritarian tendencies of President Ortega and his family.

The Brazilian economy is set to improve, with the pro-business centre right President Bolsonaro taking over in January 2019. He has promised to reduce taxes and open up the market. However, he will check and control the Chinese acquisition spree of Brazilian assets. He will promote closer ties with US and Europe.

In contrast to the right turn of Brazil, Mexico has turned to the left. The radical leftist Lopez Obrador has become President since 1 December 2018. He will increase spending on social welfare. Although he is critical of the big corporations making huge profits, he has a positive track record of working with private companies in the improvement of Mexico city when he was Mayor. 

Colombia and Chile have elected in 2018 pro-market Presidents while the new President of Peru is pragmatic and a moderate Leftist.The pro-business President Macri will struggle to retain power in the elections due in October 2019. The Argentine people are not happy with the 50 billion dollar plus IMF credit he has taken to come out of the foreign exchange and funding deficit. Many blame the IMF for worsening the economic situation of the country in the past with its harsh conditionalities.

The Odebrecht corruption scandal across Latin America and the Car Wash case of Brazil have brought down some political and business leaders and have strengthened the anticorruption movement in the region. Consequently, the governments have become more cautious and transparent in awarding large contracts.

Sources of statistics

Latin American economy https://repositorio.cepal.org/bitstream/handle/11362/44327/46/S1801133_en.pdf

Indo-Latam trade: ITC Geneva 

India’s exports to Latin America keep increasing...

  

India’s exports to Latin America increased by 16% in 2017-18 ( April to March) reaching 12 billion dollars from 10.38 billion in 2016-17, according to the Commerce Ministry of India.

India’s exports of 160 million dollars to the distant and small Uruguay  (15000 km away; population 3.4 million) is more than the exports of 133 million to Uzbekistan which is 3000 km from Delhi and has a larger population of 31 million.

India’s exports of 292 million dollars to the distant Guatemala is more than the exports of 133 million to the neighbourly Cambodia.

India exports more to Central America ( 956 million dollars) than to the Central Asian Republics ( 365 m) although the latter is closeby and has more population.

India’s exports to Mexico ( 3.78 billion) are more than the exports to Iran(2.65 bn), Thailand(3.65 bn), Russia(2.13 bn), Canada(2.5 bn)or Egypt(2.4 bn)

Latin America remained as the leading destination for India’s exports of vehicles which reached 3.76 billion. Mexico continued as the largest market for India’s vehicle exports with 2.02 billion.

Mexico continued its position as the top destination in the region after having overtaken Brazil in recent years. 

India’s exports and imports in 2017-18 ( in million dollars) are in the table below:

country	exports	imports	Total trade
Mexico	3783	3930	7713
Brasil	3064	5498	8562
argentina	709	2229	2938
Colombia	939	593	1532
Peru	761	2377	3138
chile	764	2092	2856
Venezuela	79	5866	5945
ecuador	280	194	474
Bolivia	105	667	772
paraguay	168	167	335
uruguay	160	25	185
panama	227	43	270
guatemala	292	16	308
Dominican republic	197	646	843
Costa Rica	134	67	201
honduras	146	13	159
El salvador	70	9	79
nicaragua	87	4	91
Cuba	42	2	44
Total	12007	24438	36445

  

India’s main exports ( figures in million dollars)

vehicles	3759
Equipments and machinery	1007
Organic chemicals	973
Iron and steel products	805
pharmaceuticals	779
Chemical products	630
Synthetic fibres	635
textiles	591
Plastic products	483
cotton	363
dyestuff	327
Rubber articles	243

Major destinations of vehicle exports: Mexico-2027 million dollars, Chile-284 m, Brazil-278 m, Colombia-255m, Peru-218 m, Argentina-142 m, Guatemala-98 m, Ecuador-75m, Costa Rcia-66m and Bolivia-59m

Major destinations of pharma exports: Brazil-229 million dollars, Chile-65m, Colombia-55m, Venzuela-55m, Peru-40m, Dominican Republic-35m, Guatemala-32m and Ecuador-32m

India’s major importsin million dollars

Crude oil	10490
gold	3663
copper	3007
Vegetable oil	2649
Raw sugar	920
Equipments and machinery	861
aircrafts	464
Wood pulp	503
Iron and steel	350

Gold imports which started three years back have increased steadily reaching the second position last year. The raw sugar is imported from Brasil for refining and reexports. Peru was the top supplier with 1.78 billion dollars, followed by Bolivia-663 million, Dominican republic-584 m, Colombia-308m, Brazil-289m and Mexico 37m

Venezuela continued to be the top source of imports of crude oil with 5.86 billion dollars, followed by Mexico-2.77 bn, Brazil-1.56 bn, Colombia 177 million and Ecuador 85 m.

Chile maintained its position as the top supplier of copper and Argentina as major supplier of soy oil

Trade

India’s trade with Latin America increased to 36.44 billion dollars in 2017-18 from 30.04 billion in the previous year. The imports will go up significantly in 2018-19 due to the higher prices of oil, the main import from the region. 

India’s exports will increase slightly in 2018-19, given the subdued GDP growth of 1.5% in 2018. Argentina is expected to suffer a small GDP contraction, Venezuelan GDP is projected to go down by 10%

Latin American economic growth is going to be more subdued in 2018

Latin America’s GDP growth rate is projected at 1.5% in 2018, according to the August 2018 economic survey of ECLAC (UN Economic Commission for Latin America and Caribbean). This is less than the growth of 2.2% predicted in April 2018. The region’s mild growth is being helped by the recovery in domestic demand and moderate increase in the prices of commodities.

South America’s growth rate would be 1.2% in 2018;  Central America’s 3.4%; and Mexico’s 2.2%. The only exception to regional growth is Venezuela whose GDP is expected to shrink by  10% in 2018 after the contraction of 12% in 2017. 

Total GDP of the region has come down from the peak of 6.25 trillion dollars in 2014 to 5.7 trillion in 2017.

Average inflation of the region which was 5.7% in 2017 is likely to go up marginally to around 6% in 2018. Exception is Argentina with a continuing high inflation rate of 29%.  Venezuela, has stopped publishing inflation figures. According to ECLAC the Venezuelan inflation has skyrocketed from 302% in 2016 to 2,582% in 2017 and more in 2018.  But IMF and others put the hyperinflation in five figures.

The average urban open unemployment rate of the region in 2018 is 9.2%, as against 9.3% in 2017.

Latin America’s exports have declined to 445 billion dollars in the first six months of 2018 from 573 billion in the same period in 2017. The imports have also decreased to 434 billion in the first six months in 2018 from 444 billion in the corresponding period last year.

Gross external debt of the region stood at 1.8 trillion in 2017. This means an external debt to GDP ratio of just 41% in 2017.  This is a healthy situation and in any case much better than many developed economies and some emerging markets in other regions. Most of the countries have comfortable foreign exchange reserves and the region’s total forex reserves was 852 billion dollars in June 2018. Again, Argentina and Venezuela are outliers. Argentina has just requested IMF to prepone the release of the second instalment of 50 billion rescue package. Venezuela’s reserves of 8.5 billion dollars is dangerously inadequate. 

The region had received 134 billion dollars of FDI in 2017. Almost half of it went to Brazil, followed by Mexico-26 billion, Argentina-10, Colombia-10 and Peru-6.5.

Colombia is the most promising market in the region upbeat with a new president who has a fresh start after the end of the FARC guerrilla war. About 40 percent of the country which was under FARC control at one time has now been liberated. This means new investment in agriculture, mineral exploration, industries and infrastructure.

Mexico has survived the threats and bullying of Trump. His administration has just concluded a FTA with Mexico which is a great relief for both the markets.

Brasil will hold elections amid continuing political uncertainties. The economy has tentatively recovered from the recession of 2015-16. In any case, the worst is over. 

Argentina, despite the market-friendly Macri is facing high inflation, rapid currency depreciation and low growth. The IMF rescue will give temporary relief but the country is in for some more pain.

Venezuela stands out as the hopeless one in the region with political turmoil, economic disaster, hyper inflation, shortage of essential items and breakdown in public services. Over a million Venezuelans have escaped the misery by emigrating to other countries in the region. It is ironical. In the past Venezuela had given asylum to exiles from other Latin American countries under repressive military dictatorship. More than a million Colombians as well as Peruvians and Bolivians used to emigrate to the then prosperous Venezuela for work. Now it is the other way. 

ECLAC is the knowledge partner of CII in the forthcoming India-Latin America Business Conclave to be held in Santiago, Chile on 1-2 October 2018

ECLAC survey https://repositorio.cepal.org/bitstream/handle/11362/43965/121/S1800544_en.pdf