On 23 May, the Banco Central de la República Dominicana (BCRD – the central bank) announced a 75 basis point rate cut (to 4.25%) and other measures to boost economic activity, which has been flagging. There are a number of other long-term challenges: however, early signs indicate that these are being addressed. In explaining the latest easing in monetary policy, the first since August 2012, the BCRD highlighted a number of factors. These included output below capacity, softness in domestic demand and the absence of inflationary pressures. Since December 2011, the BCRD has used an inflation-targeting framework. In 2013, the…
The International Coffee Organisation (ICO) has drawn attention to the spread of a coffee fungus – known as coffee leaf rust – through Central America, with potentially devastating consequences. These are comparatively early days in the spread of the disease but both the ICO and independent analysts are outlining a worrisome impact. The ICO estimates that up to half a million agricultural workers have lost seasonal jobs as a result of the disease, and experts are predicting an increase in crime, deforestation and environmental imbalance, and even a new surge in illegal migration out of Central America northwards to Mexico…
Between international trips (which among other places took him to China) Uruguay’s President José Mujica admitted that Uruguay, like a number of its neighbours, has fallen far short when it comes to investing in transport infrastructure. The president acknowledged that the country could fail to get the best out of promising soya and maize harvests because of “a crisis in road, port, and general logistics infrastructure”. He noted that new public private partnerships (PPP) law approved in July 2011 had failed to deliver the desired upgrade in Uruguay’s roads – no PPP deals have since been signed. Worse, the country…
On an official visit to Canada in late May, Chile’s President Sebastián Piñera made it clear he had his eye on Canadian liquid natural gas (LNG) supplies. Piñera was primarily concerned to ensure a secure energy supply for mining operations in northern Chile. Companies operating there need to power heavy mining equipment as well as using energy in the desalination of water, also in short supply in the desert region. “We will need to import a lot of energy. Because we don’t have coal, and we don’t have oil”, Piñera told the daily Globe and Mail. He added that although…
Finance Minister Felipe Larraín reacted to a lower-than-expected economic activity reading for March by seeking to reassure the markets that the normally healthy Chilean economy would get back into its stride over the next few months. The surprise reading for the Imacec (the economic activity index, which acts as a proxy for GDP) showed year-on-year growth of 3.1% in March, well below consensus expectations of around 4.5%. According to the central bank, the lower March number came despite strong growth in the mining and retail sectors. However, this was offset by lower industrial output and base effects (March 2013 had…
Sometimes small things can tell a big story. In this case, two very small stories make a relevant point about the fate of Argentina’s national currency, the peso. The first story concerns the small software applications - or apps – that sit on Android phones and are offered for download by Google, the US-based web giant. According to various sources in Argentina’s thriving software development community, Google has written to developers there saying that it will no longer be able to accept or remit payments on their behalf for paid-for-apps after 27 June 2013. The reason is not clearly stated…
After something of a lull on the hydrocarbons front, the Argentine government is refocusing its attention on energy self-sufficiency. New policy announcements suggest that President Cristina Fernández’s administration has become acutely aware of the rising cost of oil imports at a time of scarce foreign currency. The proximity of October’s mid-term congressional elections may also be a factor. It seems that foreign oil companies will be ‘helped’ to boost output – although it may not be the type of help they would have asked for, if given the choice. At the end of May, officials said that Argentina’s ten main…
In what could be a shrewd move in foreign and economic policy terms, Brazil in May announced that it would write off sovereign debts owed to it by African nations, totalling some US$900mn. The UAE-based Khaleej Times described the decision as demonstrating “genuine leadership and state of the art diplomacy”. A total of 12 countries will benefit, including Congo, Tanzania, Zambia, Ivory Coast, Gabon, Guinea, Guinea Bissau, Mauritania, Senegal and Sudan. The biggest debtors in the group were Congo Brazzaville (US$352m) followed by Tanzania (US$237m). The write-off was timed to coincide with the African Union summit held in Ethiopia, the…
The trend for big Brazilian companies to launch hefty initial public offering (IPOs), capturing positive investor sentiment towards the country, is continuing. At the end of May, Brazil’s cement giant Votorantim Cimentos said it was planning to raise as much as US$4.8bn via an IPO later this year. A preliminary prospectus said Votorantim would offer 540m shares priced at between R$16 and R$19 each. If all were sold at the higher price, the IPO would bring in R$L10.26bn or US$4.8bn. The offer will be conducted through the Bovespa in São Paulo and the NYSE. The company said that it intended…
The latest numbers on the Brazilian economy appear to confirm that the first half of 2013 is turning out to be a little more difficult than originally expected. According to the Brazilian Institute of Geography and Statistics (Ibge), GDP registered a disappointing 0.6% quarter-on-quarter growth in Q113. The year-on-year Q113 rate stood at 1.9%, described by various analysts as rather low for a member of the BRICS (Brazil, Russia, India, China and South Africa). The numbers drove Finance Minister Guido Mantega to acknowledge that the economy might grow less than the 3.5% predicted in the 2013 federal budget. Having surged…
Chile’s competitiveness has been held back by the related problems of income inequality and the defects of its education system. Its government is beginning to tackle the problems. However, a final solution is some years away. Along with Mexico, Chile is just one of two Latin American members of the Organisation for Economic Co-operation and Development (OECD, a grouping of (relatively) rich democracies. Benchmarked by Latin American standards, Chile has for a long time compared favourably in terms of its overall economic competitiveness. In its Global Competitiveness Report 2012-13, the World Economic Forum (WEF) ascribes Chile an overall Global Competitiveness…