BBVA Research: LatAm economy to grow 4.8% in ’11, P.R. recovery lagging
The Latin American economy will grow 4.8 percent this year, converging at rates of around 4 percent in 2012 and 2013, slightly above BBVA Research’s prior forecast, due to high commodity prices and stronger domestic demand than anticipated in some countries, Joaquín Víal, chief researcher for the organization’s South American unit.
The region’s positive growth is predicted despite the deteriorated global scenario, and could change quickly with an eventual worsening of the situation in Europe, Víal said during a recent presentation.
“Increases in global risk premiums could lead to slower growth in 2012-2013, which would be pinpointed in the range of 2.5 percent to 3 percent,” he said, noting Latin America is prepared to resist economic pressures.
Still, he said inflation rates in the monitored countries— Argentina, Brazil, Chile, Colombia, Mexico, Panama, Paraguay, Peru, Uruguay and Venezuela — will stabilize due to the “clear signs from central banks, a lower impact of temporary price increases, and currency appreciation,” he said.
While he did not speak directly about Puerto Rico’s condition and its place in the region’s improvement, it is widely known that the island’s economy is a direct reflection of what happens in the U.S. mainland. BBVA Research believes that the U.S. economy will grow a mere 2.3 percent next year, and 2.6 percent in 2013.
To pull out of its economic hole, Puerto Rico would have to reflect an even better performance than the U.S., where recessionary conditions have not been as protracted as they have been on the island, but could be headed for a double-dip, some analysts have said.
In terms of per-country growth, Víal said the strongest upward revision is in Argentina due to “strong domestic demand, leveraged prices and volumes of agricultural exports, and a more expansionary fiscal policy.”
The global economy experienced a slowdown in the first half of this year, especially in the U.S. and certain emerging countries.
“Nevertheless, as the factors behind the slowdown are mostly temporary in nature — high oil prices, supply chain disruptions from Japan and bad weather— global growth is set to continue at a robust pace, at 4.2 percent in 2011 and 4.4 percent in 2012,” BBVA Reseach said in a report released last week.
“However, risks to the outlook are now more tilted to the downside. Although the slowdown in activity in the US should be temporary as oil prices stop climbing and international supply chains are restored, the recovery is still weak and may be prone to relapses, as expected in the aftermath of a financial crisis with highly leveraged consumers,” the report stated. “The recent soft patch in the U.S. has reminded markets of that, and may dent consumer and producers sentiment going forward.”