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 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 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
