Economic Overview of Lain AmericaPresentation Transcript
Introduction Good Afternoon Everyone.. The Topic of Presentation for our Group is ECONOMY OF LATIN AMERICA.. Members of the group are:--- Asha, Govind & Yoshita. All the doubts, questions, suggestions will be entertained At the of the Presentation
Introduction of Latin America Latin America is a region of the Americas where Romance languages (i.e., those derived from Latin) particularly Spanish and Portuguese, and variably French – are primarily spoken. Latin America has an area of approximately 21,069,500 km² almost 3.9% of the Earth's surface or 14.1% of its land surface area. As of 2010, its population was estimated at more than 580 million. . Latin American expected economic growth rate is at about 5.7% for 2010 and 4% in 2011.
Sub Division of Latin America Latin America can be subdivided into several sub regions based on geography, politics, demographics and culture. The basic geographical sub regions are North America, Central America, the Caribbean, and South America.
Sub Division of Latin America
Interesting Facts about Economy According to Goldman Sachs' BRIC review of emerging economies, by 2050 the largest economies in the world will be as follows: China, United States, India, Brazil, and Mexico. On a per capita basis most Latin American countries, including the largest ones (Argentina, Mexico, Brazil, Chile, Peru, Venezuela, and Colombia), have per capita GDPs greater than that of China in 2009, As of 2010 Latin America included five nations classified as high-income countries: Argentina, Chile, Uruguay, Mexico and Panama.. According to a study by the World Bank, the richest deciles of the population of Latin America earn] 48% of the total income, while the poorest 10% of the population earn only 1.6 of the income. In contrast, in developed countries, the top decile receives 29% of the total income, while the bottom decile earns 2.5%.).
Interesting Facts about Economy Income from tourism is key to the economy of several Latin American countries. Mexico receives the largest number of international tourists, with 21.4 million visitors in 2007, followed by Brazil, with 5.0 million; Argentina, with 4.6 million; Dominican Republic, with 4.0 million;, Puerto Rico, with 3.7 million and Costa Rica with 2.0 million. Places such as Cancun, Galapagos Islands, Rio de Janeiro, Salvador, Margarita Island,São Paulo, Santo Domingo, San Juan, Panama City, Mexico City, Buenos Aires, Lima, are some of the popular among international visitors in the region.
Economic Overview Economic overview of All the Lain Countries is explained Below:-----
Argentina benefits from rich natural resources, a highly literate population, an export-oriented agricultural sector, and a diversified industrial base. Although one of the world's wealthiest countries 100 years ago, Argentina suffered during most of the 20th century from recurring economic crises, persistent fiscal and current account deficits, high inflation, mounting external debt, and capital flight. The economy bottomed out that year, with real GDP 18% smaller than in 1998 and almost 60% of Argentines under the poverty line. Real GDP rebounded to grow by an average 8.5% annually over the subsequent six years, taking advantage of previously idled industrial capacity and labor, an audacious debt restructuring and reduced debt burden, excellent international financial conditions, and expansionary monetary and fiscal policies. Inflation also increased, however, during the administration of President Nestor KIRCHNER, which responded with price restraints on businesses, as well as export taxes and restraints, and beginning in early 2007, with understating inflation data. Cristina FERNANDEZ DE KIRCHNER succeeded her husband as President in late 2007, and the rapid economic growth of previous years began to slow sharply the following year as government policies held back exports and the world economy fell into recession.
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ECONOMY OF BELIZE In this small, essentially private-enterprise economy, tourism is the number one foreign exchange earner followed by exports of marine products, citrus, cane sugar, bananas, and garments. The government's expansionary monetary and fiscal policies, initiated in September 1998, led to sturdy GDP growth averaging nearly 4% in 1999-2007, though growth slipped to 2.1% in 2008 and -1.5% in 2009 as a result of the global slowdown, natural disasters, and the drop in the price of oil. Oil discoveries in 2006 bolstered economic growth. Major concerns continue to be the sizable trade deficit and sizable foreign debt. In February 2007, the government restructured nearly all of its public external commercial debt, which helped reduce interest payments and relieve some of the country's liquidity concerns. A key short-term objective remains the reduction of poverty with the help of international donors.
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Economy of Brazil Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries, and Brazil is expanding its presence in world markets. Since 2003, Brazil has steadily improved its macroeconomic stability, building up foreign reserves, reducing its debt profile by shifting its debt burden toward real denominated and domestically held instruments, adhering to an inflation target, and committing to fiscal responsibility. After record growth in 2007 and 2008, the onset of the global financial crisis hit Brazil in September 2008. Brazil's currency and its stock market - Bovespa - saw large swings as foreign investors pulled resources out of Brazil. Brazil experienced two quarters of recession, as global demand for Brazil's commodity-based exports dwindled and external credit dried up. However, Brazil was one of the first emerging markets to begin a recovery. Consumer and investor confidence revived and GDP growth returned to positive in the second quarter, 2009. The Central Bank expects growth of 5% for 2010.
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Economy of Chile Chile has a market-oriented economy characterized by a high level of foreign trade and a reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating in South America. Copper alone provides one-third of government revenue. Growth in real GDP averaged 8% during 1991-97, but fell to half that level in 1998 because of tight monetary policies implemented to keep the current account deficit in check and because of lower export earnings - the latter a product of the global financial crisis. A severe drought exacerbated the situation in 1999, reducing crop yields and causing hydroelectric shortfalls and electricity rationing, and Chile experienced negative economic growth for the first time in more than 15 years. In the years since then, growth has averaged 4% per year. Chile deepened its longstanding commitment to trade liberalization with the signing of a free trade agreement with the US, which took effect on 1 January 2004. Chile claims to have more bilateral or regional trade agreements than any other country. It has 57 such agreements (not all of them full free trade agreements), including with the European Union, Mercosur, China, India, South Korea, and Mexico. Over the past five years, foreign direct investment inflows have quadrupled to some $17 billion in 2008, but FDI dropped to about $7 billion in 2009 in the face of diminished investment throughout the world. The Chilean government conducts a rule-based countercyclical fiscal policy, accumulating surpluses in sovereign wealth funds during periods of high copper prices and economic growth, and allowing deficit spending only during periods of low copper prices and growth. As of September 2008, those sovereign wealth funds - kept mostly outside the country and separate from Central Bank reserves - amounted to more than $20 billion. Chile used $4 billion from this fund to finance a fiscal stimulus package to fend off recession. The economy was starting to show signs of a rebound in the fourth quarter, 2009, although GDP still fell more than 1% for the year. In December 2009, the OECD invited Chile to become a full member, after a two year period of compliance with organization mandates. The magnitude 8.8 earthquake that struck Chile in February 2010 was one of the top ten strongest earthquakes on record. It caused considerable damage near the epicenter, located about 70 miles from Concepcion - and about 200 miles southwest of Santiago.
Picture of Chile
Economy of Colombia Colombia experienced accelerating growth between 2002 and 2007, chiefly due to improvements in domestic security, rising commodity prices, and to President URIBE's promarket economic policies. Foreign direct investment reached a record $10 billion in 2008. A series of policies enhanced Colombia's investment climate: President URIBE's pro-market measures; pro-business reforms in the oil and gas sectors; and export-led growth fueled mainly by the Andean Trade Promotion and Drug Eradication Act. Inequality, underemployment, and narcotrafficking remain significant challenges, and Colombia's infrastructure requires major improvements to sustain economic expansion. Because of the global financial crisis and weakening demand for Colombia's exports, Colombia's economy grew only 2.6% in 2008, and contracted slightly in 2009. In response, the URIBE administration cut capital controls, arranged for emergency credit lines from multilateral institutions, and promoted investment incentives, such as Colombia's modernized free trade zone mechanism, legal stability contracts, and new bilateral investment treaties and trade agreements. The government also encouraged exporters to diversify their customer base beyond the United States and Venezuela, traditionally Colombia's largest trading partners. The government is pursuing free trade agreements with European and Asian partners and awaits the approval of a Canadian trade accord by Canada's parliament. In 2009, China replaced Venezuela as Colombia's number two trading partner, largely because of Venezuela's decision to limit the entry of Colombian products. The business sector remains concerned about the impact of the global recession on Colombia's economy, Venezuela's trade restrictions on Colombian exports, an appreciating domestic currency, and the pending US Congressional approval of the US-Colombia Trade Promotion Agreement.
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Economy of Costa Rica Prior to the global economic crisis, Costa Rica enjoyed stable economic growth. The economy contracted 1.6% in 2009. While the traditional agricultural exports of bananas, coffee, sugar, and beef are still the backbone of commodity export trade, a variety of industrial and specialized agricultural products have broadened export trade in recent years. High value added goods and services, including microchips, have further bolstered exports. Tourism continues to bring in foreign exchange, as Costa Rica's impressive biodiversity makes it a key destination for ecotourism. Foreign investors remain attracted by the country's political stability and relatively high education levels, as well as the fiscal incentives offered in the free-trade zones; and Costa Rica has attracted one of the highest levels of foreign direct investment per capita in Latin America. Poverty has remained around 15-20% for nearly 20 years, and the strong social safety net that had been put into place by the government has eroded due to increased financial constraints on government expenditures. Unlike the rest of Central America, Costa Rica is not highly dependent on remittances as they only represent about 2% of GDP. Under the ARIAS administration, the government has made strides in reducing internal and external debt - in 2007, Costa Rica had its first budget surplus in 50 years. The US-Central American-Dominican Republic Free Trade Agreement (CAFTA-DR) entered into force on 1 January 2009, after significant delays within the Costa Rican legislature.
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Economy of Cuba The government continues to balance the need for economic loosening against a desire for firm political control. It has rolled back limited reforms undertaken in the 1990s to increase enterprise efficiency and alleviate serious shortages of food, consumer goods, and services. The average Cuban's standard of living remains at a lower level than before the downturn of the 1990s, which was caused by the loss of Soviet aid and domestic inefficiencies. Since late 2000, Venezuela has been providing oil on preferential terms, and it currently supplies about 100,000 barrels per day of petroleum products. Cuba has been paying for the oil, in part, with the services of Cuban personnel in Venezuela including some 30,000 medical professionals.
Economy of Dominican Republic The Dominican Republic has long been viewed primarily as an exporter of sugar, coffee, and tobacco, but in recent years the service sector has overtaken agriculture as the economy's largest employer, due to growth in tourism and free trade zones. The economy is highly dependent upon the US, the destination for nearly 60% of exports. Remittances from the US amount to about a tenth of GDP, equivalent to almost half of exports and three-quarters of tourism receipts. The country suffers from marked income inequality; the poorest half of the population receives less than one-fifth of GDP, while the richest 10% enjoys nearly 40% of GDP. The Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) came into force in March 2007, boosting investment and exports and reducing losses to the Asian garment industry. In the middle of 2008, however, the Dominican Republic's economy started slowing after several years of strong GDP growth, as the global recession had a significant negative impact on tourism and remittances. The financial crisis and the US recession caused GDP to dip in 2009, but a rebound is expected in 2010.
Economy of El Salvador Despite being the smallest country geographically in Central America, El Salvador has the third largest economy with a per capita income that is roughly two-thirds that of Costa Rica and Panama, but more than double that of Nicaragua. Growth has been modest in recent years and the economy contracted nearly 3% in 2009. El Salvador leads the region in remittances per capita with inflows equivalent to nearly all export income and about a third of all households receive these financial inflows. In 2006 El Salvador was the first country to ratify the Central America-Dominican Republic Free Trade Agreement. CAFTA has bolstered exports of processed foods, sugar, and ethanol, and supported investment in the apparel sector, which faced Asian competition with the expiration of the Multi-Fiber Agreement in 2005. El Salvador has promoted an open trade and investment environment, and has embarked on a wave of privatizations extending to telecom, electricity distribution, banking, and pension funds. In late 2006, the government and the Millennium Challenge Corporation signed a five-year, $461 million compact to stimulate economic growth and reduce poverty in the country's northern region, the primary conflict zone during the civil war, through investments in education, public services, enterprise development, and transportation infrastructure. Any counter-cyclical policy response to the downturn must be through fiscal policy, which is constrained by legislative requirements for a two-thirds majority to approve any international financing.
Economy of Ecuador Ecuador is substantially dependent on its petroleum resources, which have accounted for more than half of the country's export earnings and one-fourth of public sector revenues in recent years. Poverty increased significantly, the banking system collapsed, and Ecuador defaulted on its external debt later that year. Dollarization stabilized the economy, and positive growth returned in the years that followed, helped by high oil prices, remittances, and increased non-traditional exports. From 2002-06 the economy grew 5.5%, the highest five-year average in 25 years. The poverty rate declined during this period but remained high at 38% in 2006. After moderate growth in 2007, the economy reached a growth rate of 6.5% in 2008, in large part due to high global petroleum prices. Poverty levels declined to about 35% by the end of 2008. Economic policies under the CORREA administration - including an announcement in late 2009 terminating 13 bilateral investment treaties, one with the US - have generated economic uncertainty and discouraged both domestic and foreign private investment . The Ecuadorian economy contracted in 2009, mainly due to the global financial crisis, and also the sharp decline in world oil prices and remittance flows.
Economy of Guatemala Guatemala is the most populous of the Central American countries with a GDP per capita roughly one-half that of the average for Latin America and the Caribbean. The agricultural sector accounts for nearly 15% of GDP and half of the labor force; key agricultural exports include coffee, sugar, and bananas. The Central American Free Trade Agreement (CAFTA) entered into force in July 2006 spurring increased investment and diversification of exports, with the largest increases in ethanol and non-traditional agricultural exports. While CAFTA has helped improve the investment climate, concerns over security, the lack of skilled workers and poor infrastructure continue to hamper foreign direct investment. The distribution of income remains highly unequal with the richest decile comprising over 40% of Guatemala's overall consumption. More than half of the population is below the national poverty line and 15% lives in extreme poverty. Poverty among indigenous groups, which make up 38% of the population, averages 76% and extreme poverty rises to 28%. 43% of children under five are chronically malnourished, one of the highest malnutrition rates in the world. The economy contracted in 2009 as export demand from US and other Central American markets fell and foreign investment slowed amid the global recession. The economy will likely recover gradually in 2010 and return to more normal growth rates by 2012.
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Economy of Guyana The Guyanese economy exhibited moderate economic growth in recent years and is based largely on agriculture and extractive industries. The economy is heavily dependent upon the export of six commodities - sugar, gold, bauxite, shrimp, timber, and rice - which represent nearly 60% of the country's GDP and are highly susceptible to adverse weather conditions and fluctuations in commodity prices. Guyana's entrance into the Caricom Single Market and Economy (CSME) in January 2006 has broadened the country's export market, primarily in the raw materials sector. Economic recovery since a 2005 flood-related contraction was buoyed by increases in remittances and foreign direct investment in the sugar and rice industries as well as the mining sector. Chronic problems include a shortage of skilled labor and a deficient infrastructure. The government is juggling a sizable external debt against the urgent need for expanded public investment. In March 2007, the Inter-American Development Bank, Guyana's principal donor, canceled Guyana's nearly $470 million debt, equivalent to nearly 48% of GDP, which along with other Highly Indebted Poor Country (HIPC) debt forgiveness brought the debt-to-GDP ratio down from 183% in 2006 to 120% in 2007. Guyana became heavily indebted as a result of the inward-looking, state-led development model pursued in the 1970s and 1980s. Growth turned negative in 2009 as a result of the world recession. The slowdown in the domestic economy and lower import costs helped to narrow the country's current account deficit in 2009, despite lower earnings from exports, but growth is expected to rebound in 2010 as exports benefit from higher commodity prices.
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Economy of Haiti Haiti is the poorest country in the Western Hemisphere with 80% of the population living under the poverty line and 54% in abject poverty. Two-thirds of all Haitians depend on the agricultural sector, mainly small-scale subsistence farming, and remain vulnerable to damage from frequent natural disasters, exacerbated by the country's widespread deforestation. While the economy has recovered in recent years, registering positive growth since 2005, four tropical storms in 2008 severely damaged the transportation infrastructure and agricultural sector. US economic engagement under the Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act, passed in December 2006, has boosted apparel exports and investment by providing tariff-free access to the US. A second version of the legislation, passed in October 2008 and dubbed HOPE II, has further improved the export environment for the apparel sector by extending preferences to 2018; the apparel sector accounts for two-thirds of Haitian exports and nearly one-tenth of GDP. Remittances are the primary source of foreign exchange, equaling nearly a quarter of GDP and more than twice the earnings from exports. Haiti suffers from a lack of investment because of insecurity and limited infrastructure, and a severe trade deficit. In 2005, Haiti paid its arrears to the World Bank, paving the way for reengagement with the Bank. Haiti received debt forgiveness for about $525 million of its debt through the Highly-Indebted Poor Country (HIPC) initiative in 2009. The government relies on formal international economic assistance for fiscal sustainability.
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Economy of Honduras Honduras, the second poorest country in Central America, suffers from extraordinarily unequal distribution of income, as well as high unemployment and underemployment. The economy relies heavily on a narrow range of exports, notably apparel, bananas, and coffee, making it vulnerable to natural disasters and shifts in commodity prices; however, investments in the maquila and non-traditional export sectors are slowly diversifying the economy. Nearly half of Honduras's economic activity is directly tied to the US, with exports to the US equivalent to 30% of GDP and remittances for another 22%. The US-Central America Free Trade Agreement (CAFTA) came into force in 2006 and has helped foster investment, but physical and political insecurity may deter potential investors. The economy is expected to register marginally positive economic growth in 2010, insufficient to improve living standards for the nearly 60% of the population in poverty. ] Tegucigalpa lacks an IMF agreement; its Stand-By Agreement expired in April 2009 and former President ZELAYA's commitment to a fixed exchange rate undermined a follow-on.
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Economy of Jamaica The Jamaican economy is heavily dependent on services, which now account for more than 60% of GDP. The country continues to derive most of its foreign exchange from tourism, remittances, and bauxite/alumina. Tourism revenues account for 20% of GDP, and arrivals have remained strong, up 4% in 2009, although total revenues have declined due to discounts offered to retain visitors. The economy faces serious long-term problems: a sizable merchandise trade deficit, large-scale unemployment and underemployment, and a debt-to-GDP ratio of more than 130%. Jamaica's onerous debt burden - the fourth highest per capita - is the result of government bailouts to ailing sectors of the economy, most notably to the financial sector in the mid-to-late 1990s. The Government of Jamaica signed a $1.27 billion, 27-month Standby Agreement with the International Monetary Fund for balance of payment support in February 2010. High unemployment exacerbates the crime problem, including gang violence that is fueled by the drug trade.
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Economy of Mexico Mexico has a free market economy in the trillion dollar class. It contains a mixture of modern and outmoded industry and agriculture, increasingly dominated by the private sector. Recent administrations have expanded competition in seaports, railroads, telecommunications, electricity generation, natural gas distribution, and airports. Mexico has free trade agreements with over 50 countries including, Guatemala, Honduras, El Salvador, the European Free Trade Area, and Japan, putting more than 90% of trade under free trade agreements. Mexico's GDP plunged 6.5% in 2009 as world demand for exports dropped and asset prices tumbled, but GDP is expected to post positive growth late in 2010. The administration continues to face many economic challenges, including improving the public education system, upgrading infrastructure, modernizing labor laws, and fostering private investment in the energy sector.
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Economy of Nicaragua Nicaragua, the poorest country in Central America, has widespread underemployment and poverty. GDP fell by almost 3% in 2009, due to decreased export demand in the US and Central American markets, lower commodity prices for key agricultural exports, and low remittance growth - remittances are equivalent to almost 15% of GDP. The US-Central America Free Trade Agreement (CAFTA) has been in effect since April 2006 and has expanded export opportunities for many agricultural and manufactured goods. Nicaragua relies on international economic assistance to meet internal- and external-debt financing obligations. In early 2004, Nicaragua secured some $4.5 billion in foreign debt reduction under the Heavily Indebted Poor Countries (HIPC) initiative.
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Economy of Paraguay Landlocked Paraguay has a market economy distinguished by a large informal sector, featuring re export of imported consumer goods to neighboring countries. A large percentage of the population, especially in rural areas, derives its living from agricultural activity, often on a subsistence basis. The economy grew rapidly between 2003 and 2008 as growing world demand for commodities combined with high prices and favorable weather to support Paraguay's commodity-based export expansion. Paraguay is the sixth largest soy producer in the world. Drought hit in 2008, reducing agricultural exports and slowing the economy even before the onset of the global recession. The government reacted by introducing fiscal and monetary stimulus packages. Political uncertainty, corruption, limited progress on structural reform, and deficient infrastructure are the main obstacles to growth.
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Economy of Peru Peru's economy reflects its varied geography - an arid coastal region, the Andes further inland, and tropical lands bordering Colombia and Brazil. Abundant mineral resources are found in the mountainous areas, and Peru's coastal waters provide excellent fishing grounds. The Peruvian economy grew by more than 4% per year during the period 2002-06, with a stable exchange rate and low inflation. Growth jumped to 9% per year in 2007 and 2008, driven by higher world prices for minerals and metals and the government's aggressive trade liberalization strategies, but then fell to less than 1% in 2009 in the face of the world recession . Peru's rapid expansion has helped to reduce the national poverty rate by about 15% since 2002, though underemployment remain high. Since 2006, Peru has signed trade deals with the United States, Canada, Singapore, and China.
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Economy of Puerto Rica Puerto Rico has one of the most dynamic economies in the Caribbean region. A diverse industrial sector has far surpassed agriculture as the primary locus of economic activity and income. Encouraged by duty-free access to the US and by tax incentives, US firms have invested heavily in Puerto Rico since the 1950s. Sugar production has lost out to dairy production and other livestock products as the main source of income in the agricultural sector. Tourism has traditionally been an important source of income with estimated arrivals of more than 3.6 million tourists in 2008.
Pics of Puerto Rica
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