Economy 13-11-2017

​The business climate in Latin America reaches its best level in four years

The business climate in Latin America rose from 72.5 points in July to 99.1 points in October, its best level in just over four years, from April 2013 (103 points), according to the index published today by the Brazilian Center for Economic Studies, Fundación Getulio Vargas.

The so-called Economic Climate Index (ICE) for Latin America, which is measured jointly by the Getulio Vargas Foundation and the Institute of Economic Studies (IFO) of the University of Munich through quarterly consultations at 130 specialists from 17 countries, approached in October to the level considered "favorable" after the jump of 26.6 points in just three months.

The result indicates that the economy of the region consolidated its recovery trend after having fallen in October 2015 to its worst level in seven years (70 points) as a reflection of the serious recession recorded by some countries, mainly Brazil.

The level reached in October, in addition, is ten points higher than the average of the last ten years (89.2 points) and was attributed both to the improvement of the conjuncture in the region as to the rise in the expectation of economists for the next six months.

While the so-called Current Situation Indicator (ISA), which reflects the situation, rose from 37.4 points in July to 56.2 points in October, the Expectations Index, which measures the projections for the coming months, jumped from 116.5 points in July to 153.9 points in October.

"All the countries in the region benefited from the increase in the prices of raw materials, especially oil and minerals," says the document.

"In addition, domestic factors contributed to the improvement of the climate, such as the approval of the Macri Government guidelines in Argentina, the recovery of the mineral sector in Chile after the strike this year, and the resumption of industrial growth in Brazil after two years of deep recession, "he adds.

According to economist Lia Valls, researcher at the foundation, in addition to having registered an economic recovery in recent months, "Latin America was hit by the favorable winds that prevail in the international scenario and which signal a sustained resumption of economic growth.”

According to the study, the business climate in general for the world rose to 120 points in October, with all the main economies in the area of favorable evaluation, such as the United States (125.7 points), China (106.8 points), European Union (127.8 points) and Japan (123.9 points).

In four of the seven countries in which the indicator improved between July and October the jump was significant: with 55 points in Peru (from 71.3 to 126.1 points), 52 in Chile (from 46.4 to 98.0), 44 in Argentina (from 101.6 to 145.2) 91.7).

According to the survey, 4 of the 11 countries analyzed already have a favorable business climate (above 100 points): Argentina (145.2), Peru (126 (121.3) and Uruguay (116.6); Bolivia (78.9) and remains low in Ecuador (58.7), while in Venezuela, after several years without score, in October reached 15.5 points.


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