Latin america in 2015. manufacturing aces, commodity bases and basket cases by rishabh tah
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Latin American countries witnessed a boom in the economy between 2001 to 2011, primly because of increasing prices of commodities. However, due to recession of 2008-09 and steady fall in the prices of commodities has resulted in low to negative growth of the region. The presentation deals with the reasons behind the fall of Latin America's economy and
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Latin america in 2015. manufacturing aces, commodity bases and basket cases by rishabh tah
- 1. Latin America in 2015 Manufacturing Aces, Commodity Bases and Basket Cases
- 2. R e g i o n a l D i v i s i o n o f L a t i n A m e r i c a South America Mexico and Cenral America Argentina, Venezuela and Bolivia Caribbean Manufactured Goods Agricultural and ore commodities Agricultural and ore commodities Trade restrictions
- 3. Brazil: Mexico: Venezuela: Cuba: 76% 17% 0.96% 44% 19% 16% 11.8% 10.3% 7.6% 18% 12% 6.3% 9.2% 8.2% 5.7% 23% 18% 14% 18% 9% 8.1% 73% 6.1% 2.0% Top 3 export products and Top three export destinations of major economies in Latin America
- 4. Costa Rica: Colombia: Peru: Bolivia: 17% 15% 7.8% 18% 16% 7.2% 36% 15% 7.2% 16% 14% 13% 26% 10% 6.4%45% 13% 4.9% 45% 10% 7.4% 29% 19% 15% Top 3 export products and Top three export destinations of major economies in Latin America
- 5. E x p e c t e d r a t e 2 0 1 5 : 2 . 2 % | A c t u a l r a t e 2 0 1 5 : - 0 . 9 4 % 1.02% 0.29% 1.62% 6.22% 4.54% 5.35% 5.65% 3.89% -1.24% 5.74% 4.59% 2.95% 2.83% 0.98% -2.00% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Annual GDP growth rate of Latin America 2001 - 2014
- 6. Central America Reason for Slowdown in Latin America Mexico USA Canada 1) Mexico and Central America are manufactured good driven market 2) Most of them are exported to USA and Canada. Slow down in their economy would slow the growth of Mexico and central America
- 7. Reason for Slowdown in Latin America China Brazil Argentina Europe Chile Bolivia Venezuela Cuba Africa India Australia Russia (OPEC Observer) Middle East (OPEC) North Africa (OPEC) 1) Cuba, Venezuela, Brazil, Bolivia, Chile, Argentina etc are commodity and oil driven market. 2) Major importers are China., Europe, India and Australia. Slow down in China and Europe 3) Tough competition from Africa for commodity market 4) OPEC nations refusing to freeze the out put of petroleum production the commodity prices are falling and is not expected to raise in the near future. Resulting in low exports and low revenue from the exported material.
- 8. Reason for Slowdown in Latin America Argentina Bolivia Venezuela Further the government spending in some of the nations like Argentina, Bolivia and Venezuela are too much as they follow the populist approach in making policies, leaving the government of the countries with little to pay their external debt. The situation is further grim with Venezuela as there is a huge black money market of Dollar there which is hampering the foreign reserves of the country.
- 9. Reason for Slowdown in Latin America Cuba Another issue that is hindering the growth of Latin America is the trade embargo put on Cuba by the USA. This is resulting in less foreign exchange between other major economies of the world with the Cuba. USA has out similar or diluted trade restrictions on other countries of the region as well. Although USA still remains the biggest investor in the region, China is slowly gaining its market in terms of investment.
- 10. Contrasting Pictures of two major Trading Blocs in Latin America 2.50% 2.10% 3.10% 3.30% 2.80% -5.70% 2.40% -3.80% 3.00% 1.00% 4.00% -8.00% -6.00% -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% Mexico Chile Colombia Peru Costa Rica Venezuela Argentina Brazil Paraguay Uruguay Bolivia Pacific Alliance Trade Bloc Mercousur Trade Bloc In 2013, Pacific alliance trade bloc surpassed the exports made by Mercousur by 60%.
- 11. Solution to the problems of Latin America lies in the contrasting image of two prominent trading blocs of the region. Pacific Alliance trade bloc and Mercousur trade bloc. Though relatively new, Pacific Alliance trade bloc has already gained popularity as an investment destination and is much successful than its contemporary, Mercosur. The reason for its success is the ideology of trade that they both are started with. Pacific Alliance trade bloc is started with ideology of liberal trade and open market mostly like EU. Mercousur on the other hand is based on conserving the existing big markets of the area. There are lot of political differences between the countries of Mercousur which is hindering the trade among them. Though political differences are there in Pacific alliance, but they have kept the trade apart from them. Another reason for the success of Pacific alliance is that the bloc doesn't restrain its members to form bilateral agreements but the same is not true in Mercousur. Hence, the solution of the current situation of Latin america lies in the best practices of Pacific Alliance trade bloc.
- 12. Create a common market irrespective of differences Political reforms by shunning the populist approach Cut government spending – eradicate energy subsidies Increase tax rates to lower the inflation Clamp down on black market Promote online cash transfers Issue government bonds to control liquidity Open economy for other sectors Product basket diversification and market diversification Engage in more bileteral trade aggrements Adopt free floating currency evaluation system Promote tourism Nationalise the assets of the country for revenues
- 13. Big conceptEconomic condition of a region determines its potential to conduct international business. High inflation, mismanagement of funds, high debt of a country points to an economically weak system. This situation leads to risk of payment when trade is done. A country should not work just on populist approach and shuold make its internal policies according to global trade senarios. Political differences between contries can impact the growth pospect of respective country to a great degree. Hence, the political decisions shuold be prudent. When trade blocs are formed, they should be kept for business and not to settle political scores.
- 14. Thank You Presentation by: Rishabh Tah
Editor's Notes
- Top 3 export products and Top three export destinations of major economies in Latin America
- Year on year GDP growth of Latin America is declining because of falling commodity and oil prices.
- Animation sequence(Notes for every click): Cuba, Venezuela, Brazil, Bolivia, Chile, Argentina etc are commodity and oil driven market. Major importers are China., Europe, India and Australia. Slow down in China and Europe Along with tough competition from Africa for commodity market And OPEC nations refusing to freeze the out put of petroleum production the commodity prices are falling and is not expected to raise in the near future. Resulting in low exports and low revenue from the exported material. Further the government spending in some of the nations like Argentina, Bolivia and Venezuela are too much as they follow the populist approach in making policies, leaving the government of the countries with little to pay their external debt. The situation is further grim with Venezuela as there is a huge black money market of Dollar there which is hampering the foreign reserves of the country. Another issue that is hindering the growth of Latin America is the trade embargo put on Cuba by the USA. This is resulting in less foreign exchange between other major economies of the world with the Cuba. USA has out similar or diluted trade restrictions on other countries of the region as well. Although USA still remains the biggest investor in the region, China is slowly gaining its market in terms of investment.
- Animation sequence(Notes for every click): Major importers are China., Europe, India and Australia. Slow down in China and Europe Along with tough competition from Africa for commodity market And OPEC nations refusing to freeze the out put of petroleum production the commodity prices are falling and is not expected to raise in the near future. Resulting in low exports and low revenue from the exported material. Further the government spending in some of the nations like Argentina, Bolivia and Venezuela are too much as they follow the populist approach in making policies, leaving the government of the countries with little to pay their external debt. The situation is further grim with Venezuela as there is a huge black money market of Dollar there which is hampering the foreign reserves of the country. Another issue that is hindering the growth of Latin America is the trade embargo put on Cuba by the USA. This is resulting in less foreign exchange between other major economies of the world with the Cuba. USA has out similar or diluted trade restrictions on other countries of the region as well. Although USA still remains the biggest investor in the region, China is slowly gaining its market in terms of investment.
- Solution to the problems of Latin America lies in the contrasting image of two prominent trading blocs of the region. Pacific Alliance trade bloc and Mercousur trade bloc. Though relatively new, Pacific Alliance trade bloc has already gained popularity as an investment destination and is much successful than its contemporary, Mercosur. The reason for its success is the ideology of trade that they both are started with. Pacific Alliance trade bloc is started with ideology of liberal trade and open market mostly like EU. Mercousur on the other hand is based on conserving the existing big markets of the area. There are lot of political differences between the countries of Mercousur which is hindering the trade among them. Though political differences are there in Pacific alliance, but they have kept the trade apart from them. Another reason for the success of Pacific alliance is that the bloc doesn't restrain its members to form bilateral agreements but the same is not true in Mercousur. Hence, the solution of the current situation of Latin america lies in the best practices of Pacific Alliance trade bloc.
- Solution to the problems of Latin America lies in the contrasting image of two prominent trading blocs of the region. Pacific Alliance trade bloc and Mercousur trade bloc. Though relatively new, Pacific Alliance trade bloc has already gained popularity as an investment destination and is much successful than its contemporary, Mercosur. The reason for its success is the ideology of trade that they both are started with. Pacific Alliance trade bloc is started with ideology of liberal trade and open market mostly like EU. Mercousur on the other hand is based on conserving the existing big markets of the area. There are lot of political differences between the countries of Mercousur which is hindering the trade among them. Though political differences are there in Pacific alliance, but they have kept the trade apart from them. Another reason for the success of Pacific alliance is that the bloc doesn't restrain its members to form bilateral agreements but the same is not true in Mercousur. Hence, the solution of the current situation of Latin america lies in the best practices of Pacific Alliance trade bloc.