Ami latin american forecast 2014 se acabo la fiesta - time again to reform-2013.10.18

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Versailles Breakfast Club Presents "Se acabó la fiesta" Hosted by John Price, Managing Director of AMI

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Ami latin american forecast 2014 se acabo la fiesta - time again to reform-2013.10.18

  1. 1. Latin America Forecast - 2014 Se acabó la fiesta – time again to reform October, 2013
  2. 2. Legal notice Wherever possible, AMI has verified the accuracy of information provided by third parties, but does not under any circumstances accept responsibility for such inaccuracies should they remain unverified. It is expected that the Client and/or reader will use the information provided in this report in conjunction with other information and with sound management practices. AMI therefore will not assume responsibility for commercial loss due to business decisions made based on the use or non-use of the information provided. 2
  3. 3. Americas Market Intelligence in a nutshell • Americas Market Intelligence (AMI) is Latin America's leading Market Intelligence and Advisory group. • AMI’s founding partners are pioneers in the field of Market Intelligence in Latin America, with over 20 years experience. • AMI has experience in every market in Latin America and the Caribbean. • AMI is a member of SCIP – Strategic and Competitive Intelligence Professionals. • AMI is a member of the Global Intelligence Alliance (GIA), the world’s leading independent Market Intelligence provider. Products & Services Analytical insight and advisory, enabling you to compete more effectively and grow into new opportunities Customized market monitoring solution that provides durable insights for decision makers On demand, tailor made, consumer research State-of-the-art Market Intelligence software enabling full control of the intelligence process Consulting services, events and online resources for developing intelligence programs 3
  4. 4. Table of contents A. Global 1. Commodities 2. LatAm versus other growth markets 3. FDI B. LatAm 1. 2. 3. 4. 5. 6. 7. 8. 9. LatAm public spending Reformer list Brazil Mexico Argentina Colombia Venezuela Peru Chile 4
  5. 5. Global 5
  6. 6. Most commodity prices will continue to soften 150.0 140.0 Oil (Brent) (price per barrel) 130.0 Gold ($/troy oz) 120.0 Copper (cents/lb) 110.0 Industrial metals 100.0 Coffee arabica (cents/lb) 90.0 Agricultural combined 80.0 70.0 2010 2011 2012 2013 6 2014 Source - EIU
  7. 7. 56% of LAC exports are commodities, c.70% of South America’s 7 Source - UNCTAD
  8. 8. Latin America will underperform vs. other growth markets Latin America 25.0% Nominal USD Denominated Growth China 20.0% SE Asia India 15.0% Middle East & North Africa CAGR 10.0% 5.0% 0.0% 2010 2011 2012 2013 2014 8 2015 Source - EIU
  9. 9. Latin America remains a priority FDI destination SE Asia India Middle East & North Africa Latin America 15% 15% 31% 5% 39% China 9% 17% 17% 28% 24% 2010 2015 9 Source - EIU
  10. 10. Latin America 10
  11. 11. Government spending grew faster than the private sector over a decade of commodity price inflation LatAm public vs private consumption (USD billions) $6,000 CAGR $5,000 13.7% $4,000 $3,000 11.1% $2,000 $1,000 $2004 2005 2006 2007 private consumption 2008 2009 2010 2011 2012 2013 government consumption 11 Source - EIU
  12. 12. Governments will need to reform going forward Reform Progress 2005-2013 % movement towards best practice benchmark Proven reformers will have the upper hand in leaner times Colombia Guatemala Peru Mexico Uruguay Nicaragua Chile Argentina Brazil Venezuela -5 -3 -1 1 3 5 7 12 9 11 13 15 Source – World Bank
  13. 13. Brazil remains a consumption growth story 35,000 Number of HH earning more than $15k Passenger cars 30,000 thousands Broadband subscriber lines 25,000 20,000 Growth Stories 15,000 Mining Agrifood Infrastructure Finance Consumer Services 10,000 2010 2011 2012 2013 2014 13 2015 Source – EIU
  14. 14. Under the PT, debt levels have skyrocketed 2004 $97.1 2015 2015 Private debt (% of GDP) $170.5 2004 22.69% Government debt (USD billions) 46.30% 14 Source – EIU
  15. 15. Reforms in Mexico – challenging phase ahead Contribution to GDP (% points) + Employment Contracts and Temporary Employment Labour Law − Outsourcing + Will professionalize teacher hiring, remuneration, incentives and dismissals Education training, − Teachers protest against the education reform + Increased competition and investment in the sector Telecom − High barriers to entry and capital costs to invest + Open Mexico's energy industry to foreign investment Energy − Political backlash + More stable consumption) Fiscal source of taxes (income and − The working poor will be hardest hit 0 0.1 0.2 0.3 0.4 15 0.5 Source – AMI Analysis
  16. 16. Mexico FDI – Energy reform could provide a boost 40.0 35.0 Inward direct investment (USD billions) with energy reform Inward direct investment (USD billions) with energy reform USD billions 30.0 Manufacturing FDI (USD billions) 25.0 20.0 15.0 Growth Stories 10.0 5.0 - 2010 2011 2012 2013 2014 16 2015 Manufacturing Business services Energy Mining Consumer durables Source – AMI analysis
  17. 17. Argentina – still periled by poor government    • • • Agriculture the strongest sector Strong economic growth A pre-election minimum-wage rise and tax cuts Inflation will accelerate Depreciation of the currency The potential for diplomatic and trade disputes will remain high. Growth Stories 17 Mining Agrifood Retail
  18. 18. Colombia’s impressive growth shall continue 16.00 350.0 300.0 14.00 Inward direct investment (USD billions) Nominal private consumption (US$ bn) 12.00 FDI 10.00 200.0 8.00 150.0 Consumption 250.0 6.00 100.0 4.00 Growth Stories 50.0 2.00 - 0.0 2010 2011 2012 2013 2014 18 2015 Infrastructure Mining Energy Real Estate & Retail Consumer durables Source – EIU
  19. 19. Venezuela – the fantasy economy 18.0 31.0 16.0 14.0 30.0 12.0 29.0 10.0 28.0 8.0 Official F/X Black Market F/X - Inflation % 32.0 Inflation (%) Exchange rate Official (lBS/US$) Exchange rate Black market (BS/US$) 27.0 6.0 26.0 4.0 25.0 2.0 24.0 0.0 2010 2011 2012 2013 2014 19 2015 Source – EIU
  20. 20. Peru – poised for mass consumption growth 140 70.0 120 60.0 100 50.0 80 Penetration levels USD billions 80.0 Total loans (USD billions) Personal computers (stock per 100 people) Mobile subscribers (stock per 100 people) Passenger cars (stock per 1000 people) 40.0 60 30.0 40 20.0 20 10.0 0.0 0 2010 2011 2012 2013 2014 20 Growth Stories Mining Retail Consumer durables Financial services Logistics 2015 Source – EIU
  21. 21. Chilean purchasing power will weaken gradually 4.5 4.3 Price of cooper per pound (US$/pound) 4.1 Inflation adjusted F/X index 3.9 3.7 100.0 104.4 99.4 93.8 88.9 3.5 84.3 3.3 3.1 Growth Stories 2.9 2.7 2.5 2010 2011 2012 2013 2014 21 2015 Mining Retail Luxury Consumer services Source – EIU
  22. 22. Market Intelligence: Latin America 22 John Price +1 (305) 773-1141 jprice@americasmi.com

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