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Coface Latin America Outlook: Growth in Colombia, Chile and Argentina; Stagnation in Brazil


According to the latest economic Panorama publication from global credit insurer Coface, GDP Growth should improve in Latin America in 2015 by 2.3%. Despite the better outlook, this rate is still considered weak, mainly due to the stagflation scenario in Brazil. Brazil represents a large part of Latin America´s activity and its economy is not likely to pick up - at least in the short term.


In Colombia,the activity should remain strong. Growth will continue to be led by the domestic market, mainly due to investments in infrastructure, social housing and household consumption. Inflation closed at 3.66% in 2014, surpassing the target midpoint of 3. The recent drop in oil prices is deteriorating terms of trade, impacting its currency and putting upwards pressure on prices.


In Chile, the activity has been slowing down since the final quarter of 2013 and by the third quarter of 2014 reached its slowest growth pace since 2009 (+0.8% over one year earlier).  The movement is mainly associated with lower copper prices, which impact trade balances and investment plans. Exports inChileaccount for 27% of GDP and half of the export basket is composed of mineral commodities. A tax reform, which was signed into law at the end of September 2014, also contributed to reduced business confidence.


Argentina is still transiting through a scenario of turmoil. Activity probably contracted in 2014, inflation stands close to 40% (according to non-official sources), there is a lack of international reserves and the debt default situation has not yet been resolved. Coface forecasts that GDP will have contracted by 1.5% in 2014 and by -1% in 2015%, due to declining household consumption associated with high inflation, the deteriorated job market and low confidence concerning the future scenario.


Focus on major sectors


  • Mining inChile

Copper’s leading position will be maintained, but the scenario is challenging. Mining is a major pillar of the Chilean economy. The country is the largest producer of copper (roughly one third of world´s supply) and also produces gold, silver, molybdenum, iron and coal. Copper is responsible for 50% of Chile´s exports and 15% of gross domestic product. Rising production costs may also present a threat to the segment’s performance.


  • Construction inColombia

Contrasting with the negative perspective of the oil industry, this industry holds opportunities in an environment of strong growth and of poor infrastructure.Colombiahas been performing well in recent years and so has its construction sector. It has, in fact, been one of the highlights of the economy.


  • Auto inArgentina

A weak economic scenario is impacting the industry.Argentinais the third largest automobile market inLatin Americaand the world´s 23° largest vehicle producer.  It represents roughly 5% of GDP, or 20% of industrial production. However, activity was disappointing in 2014, mainly due to the country’s current economic scenario and its effect on consumer confidence and purchasing power. 


Annie Lorenzana

North America
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