It’s Groundhog Day for Brazil. As if 2015 was not bad enough, the International Monetary Fund (IMF) and other forecasters have downgraded its economic forecast for Brazil for 2016.
To recap 2015: Brazil fell deep into the longest running recession since the 1930s, coupled by the Petrobras Investigation and high unemployment. Brazil’s economy also shrank 3.8 percent last year, according to the IMF.
IMF now believes Brazil’s economy will shrink 3.5 percent this year, down significantly from its previous estimate of a one percent contraction. Others had predicted minimal growth have also revised down their estimates.
Venezuela is expected to face a catastrophic economic contraction of 4.8 percent in 2016.
Other Latin American countries are in for another tough year as their economies struggle with weak Chinese demand for their raw materials.
Per Enterprise Florida, Total Merchandise Trade by Country through September 2015 ranks our top 10 markets as follows:
- Dominican Republic
In 2016, Chile is forecast to grow 2.4 percent, Peru 3.5 percent, and Colombia 2.6 percent. Colombia is in a much more fragile position than a year ago, more vulnerable to external shocks.
What This Means For Florida:
Many of our top trading partners will be experiencing a challenging 2016, yet there are some bright spots in Latin America: Mexico and Argentina.
Mexico’s growth has picked up to the fastest in two years in the third-quarter while inflation fell to a record low, helped by government efforts to spur competition. Mexico’s growth remained unchanged at 2.8 percent. In Argentina, optimism remains high with since they elected a new President. Argentina was the only Latin American country have its growth outlook revised higher. It is Florida 11th largest trading partner.
While the Latin American down turn is dominated by the Brazilian recession, opportunities remain. Enterprise Florida will be taking a trade mission to Mexico May 23, 2016 – May 26, 2016 and is planning a future trade mission to Argentina. Latin American still remains a significant market for Florida. While the downturn will have an impact on overall trade number and affect our exports, Florida still has nuggets to mine.