Three key factors have affected Latin American economies
- The end of the U.S. Fed’s quantitative easing, which has brought about less favorable international funding conditions;
- The decline in commodity prices, which has depressed Latin American export revenues, and
- The Chinese economic slowdown, which also has hit commodity-exporting countries in the region.
This has resulted in contraction of overall economic growth from the forecasted 3 percent to 4 percent.
Flip it and reverse it
A slowdown in emerging economies has also had an impact on larger developed economies that depend on them as export markets for high value goods. Emerging markets have been a force and a driver for growth for the better part of the last decade. Their purchasing power and demand for imports has resulted in reduced orders and exports from developed markets.
What does this mean for Florida?
The U.S. and Florida have both experienced recent declining trade numbers. There are certainly reasons for concern. Markets that are tied to the U.S. for trade have tended to fare better during this slump than those that are tied/dependent to China.
There are some markets that are doing better than others and understanding and targeting opportunities where they can be found is essential to business success.
Read below to find a snapshot of different countries:
Brazil has been a key factor in the region’s lack luster performance. It has weighed down growth expectations due to its corruption scandals and disastrous economic performance, which has driven Brazil to experience the worst recession in 25 years. Brazil’s main trading partner is China, which accounts for about 30 percent of its total exports – reduced demand from China has hit Brazilian exports hard. Brazilian debt was downgraded to junk status in September by Standard and Poor’s, while its currency, the real, has lost about 30 percent this year against the dollar.
Economic power in the region has shifted away from Brazil to Mexico, the second biggest economy in Latin America. While Mexico has been plagued with its own challenges such as a reduction in oil prices, its economy has grown by around 2 percent year-over-year. Mexico’s main trading partner is the U.S. which has proven to be resilient and recovering at a reasonable pace. Economic outlook remains positive and growth is expected to lean more towards 2.5 percent.
North of the Panama Canal
Mexico, Central America and the Caribbean are net commodity importers. Growth has remained steady due to closer ties and dependency on the U.S. economy, which has helped keep these nations above water.
South of the Panama Canal
Fiscally responsibly economies such as Peru, Chile and Colombia are still growing but at a slower rate of 2-3 percent. Short terms belt tighten has led to some stress but will eventually result in stronger growth in the long run.