By many measures, Guatemala's economy has been performing well, and should continue to do so. Public finances are in good order. The current account is broadly balanced. The export mix is diverse. The banking sector is well capitalised. However, poverty, and attendant problems, are entrenched and widespread. They will remain so while public sector social spending is minimal and overall government revenues and spending stay at around 12%-14% of GDP. Crime/theft and corruption will remain the most problematic factors (by far) for doing business in Guatemala for the foreseeable future. The country's relative size and geographic location mean that the…
The Mexico-based Coca-Cola Femsa, the largest soft drinks bottler in Latin America, has agreed to buy Brazil’s Spaipa SA Industria Brasileira de Bebidas in a US$1.86bn cash-based deal. If approved by Brazil’s anti-trust authority, the deal will raise Femsa’s share of the Brazilian Coca-Cola market to around 39%. Femsa has been on a buying spree in recent years, acquiring various regional bottlers in its Mexican home market, one in Miami, and one as far afield as the Philippines. It has been present in Brazil for ten years, and its executives have made it clear that they see South America’s largest…
On 14 September Finland’s UPM-Kymmene Oyj will close down its large-scale pulp processing plant in Uruguay’s Fray Bentos for annual maintenance. It says that if the government authorises it to increase annual output to 1.3m tonnes, it will re-start production on 25 September; but if it has to keep to the current 1.1m tonne capacity limit, it won’t be able to re-start operations until November. The choice between the two options is highly political, and sources suggest that despite the enthusiasm of local business, the Montevideo government is unwilling to authorise greater production. The big political issue hanging like a…
Brazil’s Vale SA, the world’s third-largest mining company, said in August that its second-quarter profits had slumped by 84% year-on-year to reach US$424m, significantly below market expectations. But executives remain relatively optimistic. The profit slump was attributed to lower revenue from iron ore production, and to big currency losses, triggered by the depreciation of the Brazilian Real against the US dollar – a fall of around 10% during the quarter. The company said it lost almost US$2bn on its net financial liabilities, plus further ‘one-off’ losses of US$814m in forward and swap derivatives. The weaker Real has pushed up the…
It is one of Latin America’s biggest technology and civil engineering contracts, valued at just under US$17bn. It could transform passenger travel in Brazil’s densely populated Campinas – São Paulo – Rio de Janeiro urban area. But Latin America’s first bullet train project isn’t moving just yet: on 12 August the deadline for presenting bids was postponed for at least a year. Some now think it may not happen at all. Transport Minister César Borges said the main reason to postpone the deadline for the Trem de Alta Velocidade (TAV) project was that only one consortium, led by Alstom and…
The first round of Chile’s presidential elections will be held on 17 November. It is essentially a two-way race, with two women candidates each representing opposing ends of the country’s political spectrum. On the Right is Evelyn Matthei, representing the ruling Coalición por el Cambio (CPC), which offers continuity with the current government’s pro-market policies. On the Left is Michelle Bachelet, a former president (2006-2010) who is seeking a second term for the quadripartite alliance, Concertación de Partidos por la Democracia (CPD, or Concertación). To some degree, the opposing camps behind each candidate acknowledge that Chile’s very successful economic policy…
Finance ministers, international officials and business people across the continent have been cutting back their forecasts for Latin American economic growth. Why? Anyone away in July or August returned to find that in their absence a degree of gloom, or perhaps just greater caution and conservatism, has settled on business analysts focusing on Latin America. It has been a time to rein in forecasts for 2013 as a whole. Everyone is snipping away at the numbers. At the end of July, the United Nations’ Economic Commission for Latin America and the Caribbean (ECLAC) said it was cutting its growth forecast…