Business Climate in Latin America at 10-Year High

La Prensa, La Paz, 19 Aug, 2010: The business climate in Latin America reached a 10-year high in July, according to a study revealed by the Getulio Vargas Foundation's Center for Economic Studies (Brazil) and the University of Munich Institute for Economic Research (IFO).

The Economic Climate Index (ECI), which both institutions measure quarterly, reached a high of 6.0 points, the same value arrived at in April 2000, surpassed only in October 1997 (6.3 points). This index has been improving gradually since January 2009 (2.9 points) when it fell to its lowest level due to the world crisis, and by last April was at 5.6 points.

According to the study, July's level is "very favorable" and significantly high for Latin America, taking into account that the average during the past ten years has been 5.1 points.

Although the report assures that Latin America has entered a boom phase in the economic cycle for the first time since July 2007, it also warns that expectations are less optimistic than during the previous quarter.

"The situation in Latin America calls for caution. In the countries analyzed, expectations began to take a negative trajectory in October 2009, but the current evaluation went in the opposite direction."

While the Present Situation Index (PSI, an evaluation of the economic juncture) rose from 4.7 points in April to 5.8 in July, the Expectations Index (perspectives for the upcoming months) fell from 6.4 points to 6.2 during the same period.

The Economic Climate Index is the average of an evaluation made by 149 specialists in 17 countries of the region regarding the economic juncture and expectations for the future.

According to the study, while the Latin America Index rose to 6.0 points in July, the world index in general, including developed and developing countries, fell from 5.9 points in April to 5.7 in July.

The report indicates that Argentina, Chile, Mexico and Paraguay saw an increase in their ECI during the past quarter and remained within levels considered positive, in which Brazil, Colombia, Peru and Uruguay are also found.

The country that improved the most was Mexico. Its index rose from 4.8 points in April to 6.3 in July.

The countries with the best business climate in July were Uruguay (7.6 points), Peru (7.5), Brazil (7.3), Colombia (7.0), Chile (7.0), Paraguay (6.9), Mexico (6.3) and Argentina (5.6).

The countries that remained outside the zone considered positive were Bolivia (its index fell from 5.4 in April to 4.6 in July), Ecuador (4.2) and Venezuela (1.8).

Highlights

The Economic Climate Index was prepared by 149 specialists in 17 countries of Latin America.

Bolivia reported a negative index, which fell from 5.4 points in April to 4.6 in July, when this indicator was calculated.

Read this Article in Spanish

Source: La Prensa
Date: 19-Aug-2010