Latin American Consensus Forecasts, July 2021

Consensus Economics delivered their monthly report on Latin America taking into account different variables such as future, growth, inflation, foreign trade, interest rates, and exchange rates. Economic and financial expectations of the continent’s economic model have been presented. A general prediction suggests that the majority of the countries are on slow recovery (with some exceptions) after the pandemic. Brazil, Argentina, Chile, Mexico, and Colombia, have upgraded 2021 GDP expectations in the last two months. after the contraction caused by pandemic effects. The increase of commodities such as oil and copper is a main influence of this positive result. On the other side, the new COVID19 waves and  the relatively low vaccine supplies in Latin America might pose an obstacle for the economic development of the nations. Global issues may affect  countries’ supply chains. However, some Latino countries  are  recovering in an optimal panorama.

BRAZIL is facing challenges due to the second COVID19 wave, accompanied with high daily cases and mortality rates. Vaccination is still at a rough point. Nevertheless, Brazil’s economic model has shown remarkable resilience to pandemic challenges.  The retail and service sectors boosted, and according to the published data, is going upwards. This improvement is caused by the partial lifting of restrictions, mobility, and governmental subsidies and expenditure. Industrial production becomes positive again (+1.4% monthly) after a long period of contraction. Almost a similar scenario to the one before the pandemic. Business and consumer confidence is upgrading its performance thanks to gradual re-opening of the economy, as well as  manufacturing and services PMIs, which improves all economic sectors of the country. Consensus Economics predicts a  4.9% GDP growth for this year. Inflation continues to grow in the past months as the CPI rose from 8.1% in May to 8.3% in June. The government’s policies on inflation were consistent as the economy shows signs of recovery in the coming months. The monetary stance of the authorities is solidifying. Inflation is expected to be 6.2% at the end of the year.

Gross Domestic Product Historical Data

CHILE’s economic activity increased by 18.1% in 2021 (yearly), and by 2.6% (monthly) in May 2021. The country’s economic growth and general optimism is reinforced by vaccination; 70% of the population has already been vaccinated with the first dose. GDP growth of 7.6% is predicted for the rest of 2021. Chile is a major copper exporter which has been beneficial due to the recent raise  in commodities value. Its relatively rapid vaccination rollout has also benefited the forecasts. 

Gross Domestic Product Historical Data

MEXICO GDP forecast is estimated to grow, although base year effects following last year’s numbers have impacted inflation the most. Manufacturing contracted -0.7% in March  following a -0.8% decline in April. Global semiconductor shortages in the automotive sector have negatively influenced its  performance. Recovery in industrial activity and exports is predicted, with a consequent increase in GDP, favored by US economic stimulus. Thanks to the country ‘s proximity to the US, Mexico’s economic outlook is rising due to fiscal stimulus and supporting incoming remittances. Manufacturing sector reinforcement should get a boost from US demand and corporate spending. Interest rate will be 4.25% due to inflation, which is at 6.02% yearly. 2022 growth predictions are of unsteady development .

Gross Domestic Product Historical Data

In ARGENTINA, the yearly rate of economic downturn soared to 28.3%. The Economic Consensus GDP forecast states a weak activity outcome. Industrial production fell a resounding -5.0% (monthly). On the positive side auto and machinery production has grown in large proportions during this first half of 2021. The GDP outlook is expected to rebound for the remainder of the year. Although predictions indicate that 2022 will be a year of near-low effectiveness. Overall CPI slowed from 4.1% in April to 3.2% in June due to Argentine prices and currency controls. The suspension of meat exports has reduced the final food inflation figure. However, inflation remains at a large proportion of 3.6% (monthly).  The yearly headline CPI rate exceeded 50% in June, surpassing the Government’s guideline estimate of 29% for 2021. High inflation is predicted to continue for the remainder  of the year.

Gross Domestic Product Historical Data

COLOMBIA public finances are severely affected due to the impact of the pandemic. The Colombian government has to deal with a large budget deficit. On top of that, they suffer from an increase in public debt, which is in terrible condition. President Duque’s intention to institute fiscal reforms and help to increase revenues, have been hampered by popular protests.

Gross Domestic Product Historical Data

VENEZUELA GDP expectations for 2021 are in the negative spectrum, yet despite the US decision of allowing household propane to be imported into the country – failed infrastructure and struggles to meet the minimum needs of the population are the drivers of this humanitarian gesture-. The partial liberalization of economic controls has improved the circulation of a more ‘stable’ US Dollar, thus permitting space for future capital injections in the private sector. The Bolivar, Venezuelan national currency is subject to a permanent adjustment due  to the ongoing pattern of hyperinflation.

Gross Domestic Product Historical Data

In PERU it is estimated that GDP growth has been negatively affected after the inauguration of the newly elected President Pedro Castillo. Local and foreign investments have been affected by skepticism towards the President’s economic policies and uncertainty of his promised model. The fall of the Sol, in the face of the crisis, weakens the economic scheme. In addition, Peruvian banking institutions plan to withdraw monetary stimulus due to the imbalance of supply and demand that leads to the growth of inflationary pressures. This is a product of increased economic activity in the country.

Gross Domestic Product Historical Data

Source: http://www.consensuseconomics.com/con4/publications-schedule/