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March 2014
Highlights
Positive Regional Growth Impact from Improved Global Economic Conditions Heightened Financial Market Stress Deepens Intra-Regional Credit Differentiation Divergent Inflation Drivers Lead to Uneven Monetary Policy Adjustments Domestic Financial Sector Strength Reduces Dependence on External Funding Sources Regional Governance Affected by Structural Reforms and Leadership Succession
Contents
Financial Market Metrics .......................................................................................... 2 Regional Outlook ...................................................................................................... 3 Brazil ........................................................................................................................ 4 Mexico ...................................................................................................................... 5 Argentina .................................................................................................................. 6 Colombia .................................................................................................................. 7 Venezuela ................................................................................................................ 8 Peru.......................................................................................................................... 9 Chile ....................................................................................................................... 10 Uruguay.................................................................................................................. 11 Macroeconomic Metrics ......................................................................................... 12 Key Economic Indicators ................................................................................... 13-14 Global Sovereign Credit Ratings ............................................................................ 15
Global Economics
March 2014
Currency Performance vs USD (March 2009 - March 2014) Colombia Five-year % change vs. USD Mexico Peru Uruguay Chile Brazil -54 -66 -70 -60 -50 -40 -30 -20 Argentina Venezuela -10 0 10 20 30 1 8 7 15 15 25
Currency Market Performance vs USD (March 2009 - March 2014) 80 60 40 20 0 -20 -40 -60 -80 Mar-09 Five-year % change vs. USD
BRL MXN ARS CLP PEN VEF COP UYU
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Equity Market Performance (March 2009 - March 2014) Five-year % return in local-currency terms
600 500
Equity Market Performance (March 2009 - March 2014) Five-year % change in local-currency terms
Latin Am er ica (MSCI) Brazil Colo mbia Peru
400 300
125 129
200 100
100 26 0 Brazil
58
58
68
Chile
Colombia
Peru
Mexico Argentina
0 -100 Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Sovereign Debt Profile - Credit Default Swaps Argentina Venezuela Brazil Peru Colombia Mexico Chile 0 154 108 107 83
100
1934 1343
basis points
Brazil Chil e Colo mbia Peru Mexi co
74 500 1000
Global Economics
March 2014
Positive Regional Growth Impact from Improved Global Economic Conditions The global economy is in acceleration mode on the back of the recovery evidenced in developed economies and the relatively stable momentum in the core group of emerging-market economies. Latin American growth prospects are promising, with economic conditions in the US and Europe improving, while China maintains a solid albeit somewhat lower pace of expansion. We estimate that the Latin American real GDP will grow by around 3.0% y/y in the 2014-15 period. A material improvement in the US economic outlook will have positive effects on trade flows in both Mexico and Colombia, influenced as well by developments in global energy markets, while Chinas stable growth trajectory will imply solid demand for commodity-exporting trade-intensive countries such as Peru and Chile. All of these four economies count on credible monetary policy regimes and solid macroeconomic frameworks, which provide enough flexibility to adjust in the case of a less benign international context. While the pace of economic activity remains very soft in Brazil, there are signs of modest and gradual acceleration in the current year. Following a decade of fast growth, Uruguay is experiencing a period of economic deceleration influenced by high inflation and weakened growth prospects in its key neighbouring countries. Finally, stagflation risk, exacerbated by heightened political uncertainties, has emerged in both Argentina and Venezuela. Heightened Financial Market Stress Deepens Intra-Regional Credit Differentiation The normalization of monetary policy in the developed countries led by the US Federal Reserve will remain a key issue driving periods of high volatility in emerging markets. Long-term US interest rates have been in ascendancy since early May 2013, triggering asset re-allocation in favour of more-developed markets (emerging markets account for less than 30% of the world equity market capitalization). Flight-toliquidity trading dynamics have caused sharp swings in emerging-market equity and debt securities; yet the global perception of Latin American sovereign credit risk varies from country to country. Reform-oriented economies such as Mexico and Colombia have been subject to credit rating upgrades over the past few months; while peripheral countries such as Venezuela and Argentina will remain as distressed credits in the foreseeable future. The US dollar has become more attractive on the back of a positive US economic cycle and the gradual unwinding of monetary stimulus, leading to currency adjustments and monetary policy shifts. There is evidence of increased dollarization of investment/loan portfolios among high-net-worth investors. Nevertheless, the undervalued Mexican peso has the potential to recover faster than other Latin American currencies after the current phase of increased market stress subsides. The Colombian peso may be subject to sporadic bouts of volatility, prompting intervention by the authorities, while the Brazilian real will continue to suffer from lackluster economic recovery conditions and the need for fiscal consolidation. Divergent Inflation Drivers Lead to Uneven Monetary Policy Adjustments Inflation trends are moving in multiple directions within the region. Colombia, Peru, Chile and Mexico present a manageable inflation outlook, whereas both Brazil and Uruguay have been confronting steadily increasing pressures. Venezuela and Argentina continue to flirt with hyperinflation. Brazil executed a pre-emptive monetary tightening phase (with 350 basis points in rate hikes) over the past twelve months to counteract emerging inflationary pressures and mitigate the adverse effect of capital outflows triggered by both local and external factors. Meanwhile, with inflation relatively under control, most Latin American countries (excluding Brazil, Argentina and Uruguay) have adopted a pro-growth monetary policy bias. The financially integrated core countries of Latin America are well prepared to face an adverse external shock. Brazil accounts for 50% of the US$750 billion in international reserves held by Latin American central banks. In brief, central banks have both the tools and the institutional strength to intervene and aptly communicate their policy adjustments without causing significant negative implications for investor sentiment. Domestic Financial Sector Strength Reduces Dependence on External Funding Sources Most countries count on wellcapitalized and provisioned local financial institutions. Moreover, the steady development of local-currency credit and securities markets provide a structural shield to counteract the negative spillovers from intensified currency market volatility in countries such as Mexico, Chile, Colombia and Peru. Mexico, and to a lesser degree Colombia, Peru and Chile present an attractive alternative for international fixed-income investors as all of these countries have been focusing on developing a deeper domestic bond market and boosting national savings through the development of private pension funds. We expect this trend to remain in place; however, a steady improvement in US growth and fiscal conditions will intensify demand for the US dollar and US dollar-denominated securities in the coming two years. Regional Governance Affected by Structural Reforms and Leadership Succession Regional integration initiatives (such as the Pacific Alliance or Mercosur trade agreements), the electoral cycles in Colombia, Brazil and Uruguay in 2014, the transition to the new government in Chile, and the implementation of reforms in Mexico will shape the political landscape in Latin America. Additionally, increasing demands to improve infrastructure in Brazil and to contain drug-related violence in Mexico and Colombia, coupled with social tensions and political instability in Venezuela and Argentina will remain as key factors affecting investor sentiment.
3
Global Economics
March 2014
BRAZIL
Economic Outlook
Growth Economic activity remains soft, yet there are signs of modest and gradual acceleration as the global economy adopts a stronger cyclical upswing with positive implications for emerging-market economies. Following a 2.3% expansion in 2013, we estimate that the Brazilian economy will grow by 2-2.5% in 2014-15, aided by investments in public sector infrastructure and increased energy sector production. Recent surveys point to higher gains in industrial production for the year ahead. Persistent improvement in real wages may also add to household consumption, to be slightly tempered by an increase in consumer leverage and interest costs. Inflation & Monetary Context The Monetary Policy Committee (COPOM) of the central bank will succeed in keeping inflationary pressures under control in light of lingering exchange rate pressures and tight labour market conditions. Last year, inflation escalated as a result of the 15% exchange rate depreciation and persistently high labour costs. Looking ahead, we anticipate a mild moderation of headline inflation in the current year to slightly below the 6% y/y mark. The central bank continues to voice its commitment to the monetary regime composed of inflation targets (4.5% +/- 2.0%) and a managed floating currency scheme in order to foster financial stability and secure local-currency purchasing power. Following the increase in the policy -setting SELIC target rate to 10.75% last February, the COPOM has accumulated 350 basis points in rate hikes over the past 12 months. The end of the tightening cycle is near. Fiscal & Current Account Balance Fiscal consolidation has emerged as a top priority for current policymakers. The Brazilian fiscal imbalance has become an issue of concern to global creditors and rating agencies. The consolidated public sector deficit increased to 3.6% of GDP (and the primary surplus declined to 1.7% of GDP) in early 2014. We are of the view that electionrelated dynamics in the context of increasing demands from society to improve infrastructure will entice an acceleration of public spending and that the fiscal gap will remain high throughout 2014. On the external front, there is evidence of a slight erosion in the current account, which reached a deficit of 3.7% of GDP in the last 12 months. Net foreign direct investment flows (at 2.9% of GDP) were insufficient to cover the external gap.
Global Economics
March 2014
MEXICO
Daniela Blancas 1 (416) 862-3908 daniela.blancas@scotiabank.com
Economic Outlook
Growth The countrys economic expansion will likely accelerate in the 2014-15 period, after a soft performance in 2013. Real GDP expanded by 1.1% last year, the weakest result since 2009. Lackluster activity in the industrial sector, particularly in the construction segment, was the main contributor to the subdued economic performance. Additionally, public expenditure growth decelerated with the entrance of the new government; however, it has since recovered. Furthermore, the automotive industry will continue to be solid with new investment plans already underway. Last July, the government unveiled a plan to invest in infrastructure projects in the coming five years, which could start boosting construction in 2014. In addition, the recent approval of energy and utility sector reforms will begin to have a positive effect over the medium-term, improving economic projections. In line with stronger US growth in 2014 (2.8% for 2014 and 3% for 2015) and an accelerating local economy, we estimate that output will increase by 2.7% in 2014 and by 3% in 2015. Inflation & Monetary Context The inflation rate has increased in recent months, due to higher taxes derived from the fiscal reform approved last year; however, we expect inflation to decelerate to within the central banks official range (2-4%) by the end of the year. The central bank loosened monetary conditions, reducing the reference rate by 50 basis points to 3.50% in 2013, in response to the weaker economic performance, lower inflation and contained price expectations. We expect the current monetary policy stance to be maintained until the last quarter of the year. Fiscal & Current Account Balance Both the current and fiscal accounts will remain at manageable levels over the forecast horizon. By the end of 2013, Congress approved a fiscal reform which is expected to increase tax revenue by close to 1% of GDP in 2014 (1.4% estimate in the initial proposal). In line with this, the 2014 budget anticipates higher government spending, taking the fiscal deficit to 1% of GDP (significantly higher than the 0.4% shortfall anticipated for 2013). After reaching close to zero in 2012, the trade deficit widened in 2013 with imports growing at a faster pace than exports while remaining at a manageable level. With a slightly higher trade shortfall, the current account deficit will remain around 1.7% of GDP over the forecast period, adequately financed by foreign capital inflows.
Global Economics
March 2014
ARGENTINA
Economic Outlook
Growth Real GDP may grow by 1% in 2014-15 as the government adopts measures to normalize relative price distortions. Consumer confidence, employment and industrial production metrics indicate a deterioration in economic conditions in recent months. The loss of purchasing power as a result of escalating inflationary and devaluation pressures will have a damaging effect throughout the year with a sharp deceleration in domestic consumption and business investment. Private sector investment will remain muted due to heightened political uncertainties, price-distorting subsidy policies and growing expectations of a sharp economic contraction. Inflation & Monetary Context Argentina is flirting with a very high inflation scenario. Following the adjustment to exchange rate policies and the introduction of new official statistics, average 12-month inflation expectations now exceed the 40% y/y mark. Due to well-entrenched inflationary pressures, retailers and manufacturers will be strongly affected by a sharp increase in marginal costs. In the absence of a credible monetary regime, the risk of interest rate controls on banking sector transactions is high. Moreover, escalating inflation and depreciation waves will continue to ignite wage demands by powerful trade unions, with adverse consequences for price stability. Fiscal & Current Account Balance A lack of fiscal discipline is at the core of the countrys economic distress. The combined negative effect of increased public sector spending, decelerating consumption and investment activity and inadequate access to multilateral funding will lead to a sharp fiscal imbalance measuring 5% of GDP in 2014. The authorities do not favour any changes to current subsidies, while the International Monetary Fund (IMF) still demands continuous improvement in the quality of inflation and GDP data. The external sector remains one of the few positive growth drivers, yet distortive intervention by the state in the agribusiness and energy industries may somewhat limit the export growth potential. Nevertheless, the development of vast energy resources (Argentina counts on the worlds second largest shale gas reserves) may prompt investorfriendly foreign policy and tax adjustments in this regard.
Global Economics
March 2014
COLOMBIA
Economic Outlook
Growth The Colombian economy is on a recovery track following the weaker growth performance observed since mid-2012; however, signs have been mixed and uneven across sectors. Real GDP expanded by 5.1% y/y in the third quarter of 2013, improving significantly from the 3.3% rate averaged in the first half of the year. Construction and infrastructure were the main contributors to growth, while the industrial sector continues to lag. Both public spending and household consumption are gaining momentum, fuelling import demand. Meanwhile, export growth remains modest and below the import pace due to supply problems, particularly in the mining sector. We maintain our view that the Colombian economy expanded by 4.1% in 2013 and will likely advance by 4% on average in 2014-15. Inflation & Monetary Context Inflation dynamics have improved significantly in Colombia in recent years. Headline inflation remains close to the lower limit of the central banks target range (2-4%), averaging 2% y/y in 2013, a record low for the country. In our view, inflation will accelerate to around 2.8% y/y by the end of 2014, responding to the rebound in economic activity. After cutting the reference rate by 200 bps over a 12-month period, the central bank has maintained the monetary rate at 3.25% since last March. We do not foresee any changes to the monetary stance in the coming quarters. Fiscal & Current Account Balance The government remains committed to fiscal consolidation, with the fiscal rule anticipating a decrease in the public deficit from 2% of GDP in 2014 to no more than 1% by 2022. The central government shortfall is expected to be around 2% of GDP in the 2014-15 period. The fiscal reform approved in 2012 combined with the expected increase in oil production in the coming five years support a positive outlook for the countrys fiscal balance. We anticipate a mild widening of the current account deficit to 3% of GDP in the 2014-15 period; however, the merchandise trade balance will likely remain in surplus. Export growth will resume in the forecast period, fuelled by higher oil production (relatively stable prices), while imports will remain strong as economic activity reactivates. Foreign direct investment inflows will remain strong, fully covering the external financing gap.
Global Economics
March 2014
VENEZUELA
Economic Outlook
Growth The Venezuelan economic outlook remains subdued. Based on official data, the countrys real GDP grew by 1.6% in 2013 (5.6% in 2012) on the back of robust government spending. Despite the recent increase in the minimum wage, household consumption has been deterred by high inflation, goods scarcity and low job creation. Export growth, mainly oil shipments, has been decelerating. According to the Organization of the Petroleum Exporting Countries (OPEC), Venezuelan oil production (2.32 million barrels per day in December) has been decelerating gradually over the last year. Furthermore, investment will continue to be restrained, as the institutional framework remains weak. We expect all of these trends to remain in place in the coming years, limiting real GDP growth to a meager 0.3% in 2014 and 1% in 2015. Inflation & Monetary Context The inflation outlook continues to worsen, a trend that we expect to persist in the coming year. Supply shortages, low access to foreign goods and a limited domestic production capacity have boosted the annual inflation rate from 22% y/y in January to 56% in December. Overall inflation may be higher than that reported by official statistics, as an informal market has developed through which scarce goods are sold at higher prices, despite the governments recent efforts to control and lower prices in some goods. We expect that price distortions will remain high, with the annual inflation rate averaging around 40% y/y in 2014. Fiscal & Current Account Balance Both the fiscal and current account balances continue to deteriorate. A significant increase in public spending to boost economic activity while maintaining social programs, lower oil revenues which account for half of the countrys total revenue and off-budget expenditures have complicated the fiscal situation in Venezuela. According to International Monetary Fund estimates the fiscal deficit will average close to 13% of GDP in 2014-15. The current account surplus (around 2% of GDP) will continue to shrink over the forecast horizon on account of limited foreign investment (joint-venture projects with China and Russia will remain a key factor for external accounts), decreasing export growth and accelerating imports (to meet internal demand).
Global Economics
March 2014
PERU
Daniela Blancas 1 (416) 862-3908 daniela.blancas@scotiabank.com
Economic Outlook
Growth The Peruvian economic trajectory remains robust, although the pace of growth will continue to be slightly below the 6% mark in the 2014-15 period. Real GDP advanced by 5.0% y/y in 2013, the slowest pace since 2009, caused by lower domestic and external demand. In our view, economic activity will accelerate throughout 2014-15, as some mining projects will come on stream. Private consumption, although softer than in 2012, will continue to grow at around 5% y/y, supporting economic activity. Peru will remain vulnerable to shifts in Chinas economic performance and commodity prices; however, the countrys expanded growth base and available fiscal resources may mitigate external shocks. Inflation & Monetary Context Price pressures will remain well contained over the forecast horizon; however, we anticipate that inflation will continue to hover around the upper limit of the central banks tolerance range of 1-3% y/y. Headline inflation averaged 2.8% y/y in 2013, the lowest level in three years. In November, the central bank of Peru decided to cut the reference rate by 25 bps to 4%, the first move in two and a half years. Additionally, the central bank has been lowering the reserve requirement rates to ease monetary conditions. In our view, the authorities are approaching the end of the easing cycle, with no further significant adjustment expected. Fiscal & Current Account Balance The fiscal outlook is stable over the medium term. The non-financial public sector surplus will likely vanish by 2015 from around 0.8% of GDP in 2013, as a result of higher government spending coupled with lower commodity prices. Nevertheless, the lower surplus will likely be translated into higher public investment, particularly in social and infrastructure projects. We maintain our view that the trade balance will return to surplus over the forecast period, but remain below 2012 levels, while the nations terms of trade will deteriorate slightly. We expect imports to maintain a solid performance as local demand continues to be relatively strong. Exports are vulnerable to commodity prices; however, increasing copper production will boost shipments by 2015. Growing profits of foreign firms will lead to strong outflows, keeping the deficit on the income account in place. The overall current account deficit will remain around 4% of GDP in the 2014-15 period, to be mainly financed by sizable long-term capital inflows.
Global Economics
March 2014
CHILE
Pablo F.G. Brard 1 (416) 862-3876 pablo.breard@scotiabank.com
Economic Outlook
Growth The Chilean economy, which is estimated to have expanded by 4.0% in 2013, remains in a phase of gradual deceleration which will likely extend through the first half of 2014. However, we estimate that economic activity will begin to expand at a faster rate later in the year, reaching an average of 4.5% in 2014-15 supported by an improved external growth outlook and a gradual recovery of investment activity once the new administration takes over. The growth outlook remains extremely sensitive to external factors affecting metal markets (and price) developments. We are of the view that copper prices will tend to stabilize in 2014-15, supporting the countrys export sector. Inflation & Monetary Context The central bank is immersed in a pro-growth monetary policy easing phase in the context of a contained inflation scenario. We estimate that consumer price inflation will remain in line with the official 3% +/- 1% target over the next 24 months. The monetary authorities reduced the policy-setting short-term interest rate by 75 basis points (bps) to 4.25% over the past five months, and further cuts may be in store in the near term. Once the heightened financial market volatility associated with the normalization of US monetary policy subsides, we believe that Chilean consumer price inflation will also tend to stabilize around current levels. Fiscal & Current Account Balance The Chilean external sector remains highly sensitive to economic developments in China and the US, which will undoubtedly have an impact on the countrys terms of trade as well as on potential demand for the countrys main exports. We estimate that the current account deficit will range between 3.5% and 4% of GDP over the next 18 months on the back of a slight deterioration in the countrys trade balance (due to adjusting metal prices) while crude oil prices may decline. The incoming government reaffirmed its commitment to the structural fiscal rule (stipulating a balanced budget and supported by a sovereign wealth fund), which has allowed Chile to weather external economic and financial shocks in the past.
10
Global Economics
March 2014
URUGUAY
Economic Outlook
Growth The US$57-billion Uruguayan economy is experiencing a growth deceleration phase on the back of less benign external market conditions, weakening manufacturing activity, an adverse shock to the tourism sector and structural rigidities in indexation and exchange rate policies. Following an impressive annual average growth rate of 5.5% over the past decade, Uruguays real GDP will likely expand by 3-3.5% in the next 24 months, converging towards its potential growth rate. Deteriorating trade and investment conditions in neighbouring countries, coupled with an increase in international funding costs and eroding competitiveness resulting from an overvalued real exchange rate and high inflation, will likely limit the contribution of consumption to growth in the coming year. Inflation & Monetary Context Inflation is edging close to double-digit territory in Uruguay. Persistent currency depreciation pressures, structural wage indexation and tight labour market conditions will continue to act as the major drivers of inflationary expectations. The decelerating economic activity will contribute to moderate demand-side price pressures while intensifying labour union activism will remain a deterring force for price stabilization efforts in the coming years. The Central Bank is focused on tackling inflation as well as discouraging speculative foreign capital inflows. The political establishment is committed to keep a managed floating currency and inflation-targeting regime. Fiscal & Current Account Balance Uruguay enjoys a comfortable fiscal outlook. The consolidated general government deficit, estimated at 2.3% of GDP, will increase somewhat this year, yet it will remain in manageable territory. Once elections are over, fiscal consolidation efforts will be likely implemented to optimize public sector spending patterns. The current account deficit has been widening over the past year (to over 5% of GDP) as a result of strong import growth, increasing energy costs and negative cross-border trade activity. Looking ahead, we anticipate a narrowing of the external gap to 3-4 % of GDP in 201415 as economic growth decelerates. On a positive note, foreign direct investment inflows have fully covered the current account imbalance over the past decade.
Global Economics
March 2014
Macroeconomic Metrics
Regional GDP Growth 8 7 6 5 4 3 2 1 0 0.7 1.3 2.2 3.2 3.3 4.3 4.5 Annual % change
2004-13 2014f-15f
2004-13 2014f-15f
1.9
Consumer Price Inflation 40 35 30 10 25 20 15 10 5 0 0 Mar-09 2.8 3.1 3.1 4.1 8.3 5.8
2004-13 2014f-15f
Annual % change
8 6 4 2
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Public Sector Fiscal Balance 2 0 -2 -4 -6 -8 -10 -12 -14 -12.9 -4.8 -3.8 -3.3 -2.7 -2.3 -0.7 % of GDP
USD billion
Brazil Mexico Chile Peru Argentina Colombia Uruguay
Venez uela
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
12
Global Economics
March 2014
Brazil
Population (millions) as of 2012 198.4 1998 Ratios and Rates of Change Real GDP (% change) Industrial Production (% change) Current Account (% of GDP) Foreign Reserves (months of imports) Exchange Rate USDBRL (% change) CPI (eop, % change) CPI (average, % change) Government Balance (% of GDP) Government Debt (% of GDP) Actual Numbers Nominal GDP (USD bn) Exchange Rate USDBRL (eop) Exchange Rate (average) Central Bank Rate (eop %) Exports (goods, USD bn) Imports (goods, USD bn) Trade Balance (USD bn) Current Account (USD bn) Foreign Reserves (USD bn) 2012 1.0 -2.5 -2.4 20.4 -9.9 5.8 5.4 -2.5 58.8 2013e 2013 2.3 1.1 -3.7 19.8 -15.1 6.0 6.0 -3.3 57.2 2014f 2014 2.0 2.0 -3.6 17.0 -5.8 6.0 5.8 -3.5 58.0 2015 2015f 2.5 2.5 -3.2 17.2 -4.0 5.5 5.7 -3.0 57.0
Mexico
Population (millions) as of 2012 117.1 1998 Ratios and Rates of Change Real GDP (% change) Industrial Production (% change) Current Account (% of GDP) Foreign Reserves (months of imports) Exchange Rate USDMXN (% change) CPI (eop, % change) CPI (average, % change) Government Balance (% of GDP) Government Debt (% of GDP) Actual Numbers Nominal GDP (USD bn) Exchange Rate USDMXN (eop) Exchange Rate (average) Central Bank Rate (eop) Exports (goods, USD bn) Imports (goods, USD bn) Trade Balance (USD bn) Current Account (USD bn) Foreign Reserves (USD bn) 2012 2012 3.9 2.6 -1.2 5.3 7.8 3.6 4.1 -2.9 43.5 2013 2013e 1.1 -0.7 -1.2 5.6 -1.4 4.0 3.8 -4.1 44.0 2014 2014f 2.7 2.3 -1.6 5.7 -2.4 4.2 4.1 -4.1 43.9 2015 2015f 3.7 3.3 -1.8 5.9 -1.3 4.0 4.0 -3.5 43.9
Argentina
Population (millions) as of 2012 41.0 1998 Ratios and Rates of Change Real GDP (% change) Current Account (% of GDP) Foreign Reserves (months of imports) Exchange Rate USDARS (% change) CPI (eop, % change) CPI (average, % change) Government Balance (% of GDP) Government Debt (% of GDP) Actual Numbers Nominal GDP (USD bn) Exchange Rate USDARS (eop) Exchange Rate (average) Exports (goods, USD bn) Imports (goods, USD bn) Trade Balance (USD bn) Current Account (USD bn) Foreign Reserves (USD bn) 2012 1.9 0.0 7.6 -14.3 25 23 -4.3 47.0 2013e 2013 3.8 -0.2 5.0 -32.6 28 25 -3.6 47.0 2014f 2014 1.5 -0.8 3.9 -61.0 38 33 -5.5 46.0 2015f 2015 1.0 -0.7 3.1 -23.8 25 28 -4.0 45.0
Colom bia
Population (millions) as of 2012 46.6 1998 Ratios and Rates of Change Real GDP (% change) Industrial Production (% change) Current Account (% of GDP) Foreign Reserves (months of imports) Exchange Rate USDCOP (% change) CPI (eop, % change) CPI (average, % change) Government Balance (% of GDP) Government Debt (% of GDP) Actual Numbers Nominal GDP (USD bn) Exchange Rate USDCOP (eop) Exchange Rate (average) Central Bank Rate (eop) Exports (goods, USD bn) Imports (goods, USD bn) Trade Balance (USD bn) Current Account (USD bn) Foreign Reserves (USD bn) 2012 4.2 -0.4 -3.3 7.6 8.8 2.4 3.2 0.2 32.8 2013 2013e 4.1 -1.3 -3.4 8.8 -9.2 1.9 2.0 -2.4 32.3 2014 2014f 4.5 2.8 -3.3 8.9 -2.6 2.8 2.5 -2.3 31.6 2015 2015f 4.5 3.2 -3.2 9.0 -1.0 3.0 3.0 -2.2 30.2
13
Global Economics
March 2014
Venezuela
Population (millions) as of 2012 29.5 1998 Ratios and Rates of Change Real GDP (% change) Current Account (% of GDP) Foreign Reserves (months of imports) Exchange Rate USDVEF (% change) CPI (eop, % change) CPI (average, % change) Government Balance (% of GDP) Government Debt (% of GDP) Actual Numbers Nominal GDP (USD bn) Exchange Rate USDVEF (eop) Exchange Rate (average) Exports (goods, USD bn) Imports (goods, USD bn) Trade Balance (USD bn) Current Account (USD bn) Foreign Reserves (USD bn) 2012 5.6 2.5 6.0 0.0 20 21 -17 46.0 2013e 2013 1.6 2.4 4.8 -32 56 41 -15 53.4 2014f 2014 0.3 2.0 4.4 -26 40 45 -13 56.0 2015 2015f 1.0 1.8 4.1 -23 30 35 -13 59.0
Peru
Population (millions) as of 2012 30.5 1998 Ratios and Rates of Change Real GDP (% change) Current Account (% of GDP) Foreign Reserves (months of imports) Exchange Rate USDPEN (% change) CPI (eop, % change) CPI (average, % change) Government Balance (% of GDP) Government Debt (% of GDP) Actual Numbers Nominal GDP (USD bn) Exchange Rate USDPEN (eop) Exchange Rate (average) Central Bank Rate (eop) Exports (goods, USD bn) Imports (goods, USD bn) Trade Balance (USD bn) Current Account (USD bn) Foreign Reserves (USD bn) 2012 6.3 -3.3 19 5.4 2.6 3.7 2.1 20.5 2013 2013e 5.0 -3.6 19 -9.6 2.9 2.8 0.8 18.6 2014 2014f 5.4 -4.2 18 -0.5 3.0 3.0 0.3 17.1 2015 2015f 5.6 -4.0 18 1.3 2.5 2.7 0.1 15.8
Chile
Population (millions) as of 2012 17.4 1998 Ratios and Rates of Change Real GDP (% change) Industrial Production (% change) Current Account (% of GDP) Foreign Reserves (months of imports) Exchange Rate USDCLP (% change) CPI (eop, % change) CPI (average, % change) Government Balance (% of GDP) Government Debt (% of GDP) Actual Numbers Nominal GDP (USD bn) Exchange Rate USDCLP (eop) Exchange Rate (average) Central Bank Rate (eop) Exports (goods, USD bn) Imports (goods, USD bn) Trade Balance (USD bn) Current Account (USD bn) Foreign Reserves (USD bn) 2012 2012 5.6 3.4 -3.5 6.7 7.8 1.5 2.9 0.6 11.2 2013e 2013 4.0 3.0 -3.5 6.1 -9.7 3.0 2.0 0.1 11.1 2014f 2014 4.1 3.5 -3.3 5.6 -3.7 3.1 2.9 -0.5 11.4 2015 2015f 4.5 3.7 -3.0 5.1 -2.8 3.0 3.0 -0.8 13.5
Uruguay
Population (millions) as of 2012 3.4 1998 Ratios and Rates of Change Real GDP (% change) Current Account (% of GDP) Foreign Reserves (months of imports) Exchange Rate USDUYU (% change) CPI (eop, % change) CPI (average, % change) Government Balance (% of GDP) Government Debt (% of GDP) Actual Numbers Nominal GDP (USD bn) Exchange Rate USDUYU (eop) Exchange Rate (average) Exports (goods, USD bn) Imports (goods, USD bn) Trade Balance (USD bn) Current Account (USD bn) Foreign Reserves (USD bn) 2012 3.9 -5.4 14.1 3.9 7.5 8.1 -2.8 59.6 2013e 2013 4.0 -4.4 16.9 -12.1 9.1 8.5 -2.3 58.9 2014f 2014 3.3 -4.3 18.1 -7.0 8.5 8.7 -3.0 59.1 2015 3.2 -4.0 17.8 -4.3 8.0 8.3 -2.3 58.8
14 14
Global Economics
March 2014
Fitch
EUROPE ASIA & OCEANIA MIDDLE EAST & AFRICA
Aaa
Austria Denmark Finland Germany Luxembourg Netherlands (-) Norway Sweden Switzerland
AAA
Canada
Denmark Finland Germany Luxembourg Norway Sweden Switzerland United Kingdom (-)
AAA
Austria Denmark Finland Germany Luxembourg Netherlands (-) Norway Sweden Switzerland
Australia Singapore
Aa1
Hong Kong
United States
Austria Netherlands
AA+
Hong Kong
Aa2
Macau
AA
Belgium France
New Zealand
Kuwait Qatar
AA
Belgium
New Zealand
Kuwait
Aa3
Belgium (-)
Saudi Arabia
AA-
Czech Republic
AA-
Bermuda (-)
South Korea
A1
Czech Republic
Israel Oman
A+
South Korea
Israel
A+
Chile
A2
Poland Slovakia
Slovakia
Oman
Malta
Israel
A3
Mexico
Malta
Malaysia (+)
Poland Slovenia
Malaysia
A-
Poland
Malaysia (-)
Baa1
Russia
Thailand
BBB+
Kazakhstan Thailand
BBB+
Mexico Peru
Kazakhstan Thailand
Baa2
Kazakhstan (+)
Bahrain (-)
BBB
BBB
Baa3
BBB-
Uruguay
Iceland Spain
Morocco (-)
BBB-
Uruguay
Romania Turkey
Morocco
SPECULATIVE GRADE
M oody's
RATING AMERICAS EUROPE MIDDLE EAST ASIA & OCEANIA & AFRICA RATING AMERICAS
Fitch
EUROPE ASIA & OCEANIA MIDDLE EAST & AFRICA
Ba1
Guatemala
Morocco (-)
BB+
Indonesia
BB+
Ba2
BB
BB
Ba3
Portugal
Bangladesh
Tunisia (-)
BB-
Jordan (-)
BB-
El Salvador (-)
Sri Lanka
Tunisia (-)
B1
Dominican Republic
B+
Dominican Republic
B+
Venezuela (-)
B2
Cambodia Vietnam
Ecuador (+)
Cambodia
Lebanon (-)
B3
B-
Cyprus Greece
Pakistan
B-
Jamaica
Egypt
Caa1
Cuba Ecuador Venezuela (-) Belize Jamaica (+) Cyprus (-) Greece
Pakistan (-)
Egypt (-)
CCC+
Argentina (-)
CCC+
Caa2 Caa3 Ca
Note : (+) positive outlook (-) negative outlook N.R. - Not Rated. When Moody's places a rating on watch in the short-term *+ denotes possible upgrade, *- denotes possible downgrade & * denotes developing. A credit is removed from the Watchlist when the rating is upgraded, downgraded or confirmed. Ratings as at M arch 2014
15 15
Global Economics
March 2014
REGIONAL ECONOMISTS
Guillermo Arbe (Peru) 51 (1) 211-6052 guillermo.arbe@scotiabank.com Mario Correa (Mexico) 52 (55) 5229-2458 mcorrea@scotiacb.com.mx Benjamin Sierra (Chile) 56 (2) 4644974 benjamin.sierra@scotiabank.cl
Scotiabank Economics
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This report has been prepared by Scotia Economics as a resource for the clients of Scotiabank. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither Scotiabank nor its affiliates accepts any liability whatsoever for any loss arising from any use of this report or its contents.
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