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Date: 11 February 2026

Type: General Election

Main contenders: The Barbados Labour Party (BLP), led by Prime Minister Mia Mottley; the Democratic Labour Party (DLP), led by Ralph Thorne.

The BLP under Prime Minister Mia Mottley is seeking a third consecutive term after two successive clean sweep wins in 2018 and 2022. There is little reason to suppose that the DLP under the leadership of Ralph Thorne can bounce back sufficiently from its recent drubbings to gain power. Thorne, himself, was elected as a BLP member but crossed the floor after the 2022 election to become the DLP’s sole member of the House of Assembly and the party’s leader. One of the DLP’s problems is that there is little to distinguish it ideologically from the BLP, and, as far as personalities are concerned, Thorne cannot match Mottley’s charismatic appeal.

This is the second time that Mottley has opted for an early election, having gone to the polls over a year early in 2022. On that occasion, what proved to be a triumphantly successful strategy was actually not without risk. The BLP had presided over a heavy economic contraction in 2020 as a result of the coronavirus (Covid-19) pandemic and minimal growth in 2021.

The economic background this time is far more encouraging. 2022 saw a big post-pandemic bounce back in economic activity, with growth of 17.8%, to be followed by 4.1% in 2023 and 4.0% in 2024. Growth for 2025 is estimated to have been around 2.7%. Inflation was down to 1.4% in 2024, although it edged up to 2.3% in 2025. And debt, which was as high as 142.8% of GDP in 2017, is now down to around 100% and on target for the government’s goal of 60% of GDP by FY2035/36.

One reason for Mottley’s decision to go for an early election will have been to catch the DLP off balance. Another reason, however, might have been the IMF’s warning at the time of its June 2025 review of the Barbados economic performance that while the economic outlook was stable, “risks to the outlook are tilted to the downside, amidst the highly uncertain external economic environment and Barbados’ continued vulnerability to global shocks and natural disasters”.

A key point to watch in the election will be voter participation. Even if voters are not yet prepared to put the DLP back into government, a low turnout could suggest a growing disenchantment with politics, and the continuation of a worrying trend. Turnout of 60% in 2018 was slashed to 43% in 2022. 

REGIÓN | Advertencia sobre fragmentación regional. Varios expertos latinoamericanos están advirtiendo de los peligros que representan tener numerosos proyectos de integración regional operando al mismo tiempo. El 17 de noviembre, fue presentado un nuevo libro por el Instituto de Estudios Latinoamericanos (IELAT) de la Universidad de Alcalá, titulado ‘América Latina: Sociedad, Economía y Seguridad en un Mundo Global’, que se concentra en la cuestión de la fragmentación económica regional.

Uno de los oradores en el evento fue Enrique Iglesias, el titular del Secretariado General Ibero-Americano (Segib), y ex secretario ejecutivo de la Comisión Económica para América Latina y el Caribe de la ONU (Cepal; 1972-1985). Iglesias concuerda con la premisa central del libro, de que el surgimiento de la Alianza del Pacífico –el bloque comercial que está compuesto por Chile, Colombia, México, y Perú– como un nuevo competidor para el otro gran agrupamiento económico de Sudamérica, el Mercado Común del Sur (Mercosur) –compuesto por Argentina, Brasil, Paraguay, Uruguay, y Venezuela–  promoverá una incrementada fragmentación regional y socavará el proceso general de integración en América Latina. Él dijo que la existencia de una serie de acuerdos económicos potencialmente contradictorios a través de la región “contribuye al sentimiento de que el mundo se está organizando de una manera que no lo hemos planeado ni deseado […] nosotros somos de la idea de una América Latina unida”.

URUGUAY | Concluyeron las negociaciones salariales. El 18 de diciembre la prensa uruguaya informó que el gobierno del Presidente José Mujica había concluido exitosamente las tripartitas negociaciones colectivas de salarios –que incluyen al gobierno, empleadores y sindicatos de trabajadores– para el 2014 y se estaba preparando para hacer públicos los resultados de la misma. Esto pondrá fin a un prolongado proceso que ya había sobrepasado su fecha limite fijada para el 1 de noviembre. El proceso anual a través del cual son revisados los salarios de 500.000 trabajadores es siempre complejo; pero a pesar del retraso de este año, el mismo fue considerado exitoso por la principal organización sindical de Uruguay, el Plenario Intersindical de Trabajadores-Convención Nacional de Trabajadores (Pit-Cnt). De acuerdo con el Pit-Cnt, 115 de sus 130 sindicatos miembros llegaron a un acuerdo con sus respectivos empleadores cubriendo los incrementos salariales para los próximos tres años, con 10 negociaciones de sindicatos y empleadores requiriendo el arbitraje del gobierno, y cinco sectores aún negociando términos, incluido el sector clave de la producción agrícola que emplea a 50.000 personas.

Las dificultades presentadas en la conclusión de las negociaciones tripartitas este año, de nuevo han derivado en cuestionamientos en cuando a su efectividad, que los críticos alegan que se ha convertido en un mecanismo anticuado. Aún así, el vocero del Pit-Cnt, Milton Castellano, saludó el proceso de negociación tripartita afirmando que el hecho de haber llegado por último a un acuerdo muestra que aún es un método válido y efectivo. En particular, Castellano elogió el hecho que el proceso no solamente permite a los trabajadores asegurar un incremento de salarios, sino también otras mejoras, tales como la demanda de mejores condiciones higiénicas y la igualdad de género.

Sin embargo, Mercedes Comas, una economista en Price Waterhouse Coopers, dijo que el trabajo representa el más alto factor de producción en Uruguay, y teniendo que aumentar constantemente los salarios en estos términos, probablemente socavará los índices de productividad. Quizá más importante para el gobierno de Mujica, evitar las tensiones que tales negociaciones provocan entre el sector privado, funcionarios del gobierno, y los sindicatos podría ser políticamente beneficioso para la gobernante coalición de izquierda del Frente Amplio, que tiene una larga historia de participación en los movimientos sindicales, y a menudo depende del apoyo electoral de Pit-Cnt.

BRASIL | Petrobrás halla petróleo en Potiguar. El 18 de diciembre la firma petrolera estatal de Brasil, Petrobrás, anunció el descubrimiento de un depósito de petróleo en la cuenca de Potiguar, ubicada a 55kms afuera de las costas del estado de Rio Grande do Norte, en el noroeste de Brasil. El descubrimiento fue hecho como resultado de una operación llevada adelante como parte de la empresa conjunta de Petrobrás con la firma petrolera Petrogal de Portugal. Este es el primer depósito en ser hallado en la cuenca de Potiguar. Petrobrás es el accionista mayoritario de la concesión de la cuenca de Potiguar, con una participación del 80%, mientras que Petrogal posee el resto. El descubrimiento ayudará a Petrobrás a consolidarse como una de las compañías petroleras de más rápido crecimiento en el mundo. Actualmente, Petrobrás produce alrededor de 2m de barriles de petróleo por día, obtenido principalmente en aguas profundas en el Océano Atlántico, donde se están haciendo continuamente nuevos descubrimientos de petróleo.

• Paraguay actualiza su transporte público

El 17 de diciembre el gobernador del departamento Central de Paraguay, Blas Lanzoni Achinelli, se unió con Esteban Dávalos, el presidente de la compañía Lince de transporte público, para anunciar el lanzamiento de su primer servicio de autobús para usuarios discapacitados en el país. Dávalos explicó que todos los buses del servicio de la ruta de la Línea 26 ahora tendrán elevadores hidráulicos, que los harán accesibles para usuarios discapacitados. Dávalos agregó que los buses también proveerán a los usuarios con acceso a Internet móvil, así como también equipos de vigilancia con cámaras de video. Lince también anunció que empleará a personas discapacitadas para cobrar boletos esta ruta. Lanzoni, a su vez, dijo que el ministerio de transporte impulsará un proyecto de ley que requerirá que todas las compañías del servicio de transporte actualicen el 10% de sus vehículos para cumplir con estos estándares.

On 2 June the state-owned Metro de Panama S.A., which is responsible for the Panama City Metro, announced that it had awarded the US$1.8bn contract for the second line of the metro to Consorcio Línea 2 (Brazil’s Constructora Norberto Odebrecht and Spain’s FCC Construcciones). The Odebrecht-FCC consortium, which also built the first metro line for about US$2bn, beat two other bidders - UTE Panama II (comprised of Spain’s Dragados SA, Mexico’s Ingenieros Civiles Asociados and Peru’s Graña y Montero) and Consorcio PANAMetro (China Harbour Engineering Company, China Railway First Group and Spain’s Corsan-Corviam Construction). The second metro line will span 21km, comprise 16 stations and is expected to be completed by December 2018.

Populist leaders like Trump on the right or AMLO on the left are notorious for creating an electorally focused narrative which disregards any inconvenient facts. AMLO remains remarkably popular (60%-plus approval ratings in the fifth out of his six years in office). This in part reflects his strong communications skills, delivered through extended daily morning press conferences known as mañaneras. A feature of these is that he makes many unsubstantiated claims - another way of saying that he tells untruths – so as to create a favourable ‘spin’. He is of course not the only politician within or beyond Latin America who does so.

In the case of fentanyl, a key part of AMLO’s narrative is to claim that, against all hard evidence to the contrary, it is simply not produced in Mexico and is a US problem essentially caused by US decadence and weak family values. In April for example, the Mexican president said: “Here, we do not produce fentanyl, and we do not have consumption of fentanyl. Why don’t they [the United States] take care of their problems of social decay?” AMLO went on to list reasons why he thought US citizens might be turning to the drug, including the existence of single parent families, parents who force their grown children to leave their home, and people who put elderly relatives in old-age homes “and visit them once a year”. While politically on the left, this reflects the fact that AMLO is at heart a social conservative. Referring to the US, AMLO has said: “There is a lot of disintegration of families, there is a lot of individualism, there is a lack of love, of brotherhood, of hugs and embraces.”

AMLO has insisted on this view despite the consensus among most US and Mexican analysts that almost all the fentanyl consumed in the United States is now produced and processed in Mexico, using precursor chemicals supplied from China. In February of this year the army said it had seized more than half a million fentanyl pills in a raid in Culiacán, Sinaloa, in what it described as the largest synthetic drug lab yet discovered. How this could happen in a country with “zero fentanyl production” was not explained. More recently, in August 2023, AMLO suggested US data on fentanyl is contradictory, saying “that’s a problem that they have, with all due respect in the US government. There is no coordination between themselves.” The Mexican president has also used his catchphrase when presented with any information that portrays his administration in a poor light: yo tengo otros datos (‘I have other information’).  

Mexican security analyst David Saucedo concludes bluntly that “the president is lying. The Mexican cartels, above all the CJNG and the Sinaloa cartel, have learned to manufacture it…they themselves buy the precursor chemicals, set up laboratories and distribute it to cities in the US.” Saucedo also said that the cartels were “little by little” building a fentanyl monopoly as they had taken a presence “along the whole chain of production and sales”.

US officials take the same view. Anne Milgram, a DEA director, said that CJNG and Sinaloa cartels are responsible for “virtually all” the fentanyl and methamphetamine consumed in the United States. She has said: “They buy precursor chemicals from China, ship them to Mexico, mass-produce fentanyl, use much of it to make fake pills, and then smuggle it into the United States by land, sea, and air.” Another official, US Assistant Secretary of State for International Narcotics and Law Enforcement Affairs Todd Robinson, also confirmed that fentanyl is produced in Mexico adding “I’ve seen it myself”. Robinson claimed nevertheless that, despite public disagreements over where the drug is being manufactured, anti-narcotics cooperation between the two countries is “very good”.

Fentanyl flows through Mexico

Source: InSight Crime

On 18 February President Rodrigo Chaves vetoed a bill that aims to improve connectivity between Costa Rica and its Central American neighbours by reducing the price of low-cost flights.

Bill 24,207 was introduced by opposition lawmaker Eliécer Feinzaig of the opposition Partido Liberal Progresista (PLP). Known as “the law to promote low-cost flights in Central America,” it was first debated by lawmakers on 8 October and again on 4 February. It aims to cut taxes on return flights that cost less than US$100 for a return ticket, and US$120 for return journeys to the Dominican Republic, making it cheaper to travel and boosting economic activity. “It is strange that President Chaves has chosen to be an obstacle to the Costa Rican people being able to obtain these benefits,” said Feinzaig.

However Chaves has argued that the law would not make flights more affordable, but only succeed in reducing the amount of tax revenue collected by Costa Rican authorities. He has also cited concerns that more flights to nearby destinations would affect Costa Rica’s tourism industry by encouraging visitors to spend less time in the country.

On 24 February Feinzaig wrote a column in local media outlet El Mundo in which he set out he set out his answers to the opposition to the bill. He called it “absolutely false” that tourists would spend less time in Costa Rica, citing the fact that the law would only reduce taxes on low-cost flights with no baggage allowance. As most tourists travel with luggage, they would not benefit from lower taxes, argues Feinzaig, who also uses this point to push back against suggestions that the bill would encourage Costa Ricans to holiday in Central America rather than at home.

In his column, Feinzaig also rejects the idea that the bill would be unconstitutional because it would regulate air fares. Instead, he argues, it offers an incentive, as airlines will not be obliged to offer return tickets without luggage for less than US$100. Claims that the law would lead to a massive reduction in tax receipts are also “absolutely false,” writes Feinzaig, as the deduction would only apply to tickets with a final destination in Central America, not those connecting to flights in other parts of the world. 

In addition, Feinzaig cites World Bank (WB) research published in April 2024 which found that flights within Central America are up to three times as expensive as similar journeys in South America. Researchers found that a one hour flight from El Salvador to Costa Rica cost US$500-$800 in March 2024, pricing most of the region’s population out of air travel, inconveniencing those who want to travel for pleasure but also hamstringing business and trade. 

Researchers found that high prices are due to limited competition and high rates of airport fees on regional tickets. While domestic flights are charged low fees, intraregional flights are charged similar fees to long-distance extraregional flights, limiting the entry or expansion of airlines and therefore the creation of new routes within the region. Reducing these fees would help to intensify competition and eventually reduce the cost of intraregional flights, according to the WB.

By taking action to reduce air fares, the WB argues that Central American nations could increase regional integration and boost economic growth by stimulating business activity. This would lead to job creation in manufacturing and services, including tourism and hospitality, it adds. The WB has been working with regional governments to encourage cooperation in reducing fees on intra-regional flights, and it cites Panama’s 2023 decision to cut departure fees at the Panama-Pacífico Airport, which primarily serves low-cost airlines. 

Further cooperation is needed in order to coordinate these efforts, but Costa Rica could make the first step. Although Chaves’ veto could mean that the bill is archived, Feinzaig is convinced that his bill has enough support to override the veto. This would require two-thirds of lawmakers to back the bill, equivalent to 38 votes. If the law is approved in this way, it could inspire similar efforts in other countries.

President Juan Orlando Hernández has ruffled feathers in the US State department since taking office in late January, shaking up the long close-knit bilateral political and security ties in a declared bid to set them on a more even keel. He is now also training his sights on the commercial relationship with the country’s main traditional trade partner and investor, arguing that the US-Central America-Dominican Republic Free Trade Agreement (Cafta-DR) is not working as well as it should for Central America.

On 7 October Honduras’s deputy minister for trade and investment Melvin Redondo announced that the Hernández government had formally submitted a request to the US commerce department for a revision of the 2004 Cafta-DR. Redondo said that the Honduran government feels that the treaty needs to be “reinvigorated”, mentioning specifically a need for a re-examination of the rules of origin, as well as market access and phyto-sanitary rules.

The request, he made clear, was at the bilateral level, although he did not rule out a general request from the region for a revision at a later stage. Honduran and US officials are scheduled to meet in Tegucigalpa in February 2015 for talks on how to revitalise bilateral trade and commercial relations, he told local journalists.

President Hernández first mentioned the need to revise the Cafta-DR deal in August, at a forum organised by the Honduran branch of the American Chamber of Commerce (Ancham) in Tegucigalpa, where he declared that the agreement could be made to “work better”.

According to the Office of the US Trade Representative (USTR), bilateral trade in merchandise goods between the US and Honduras was valued at US$9.8bn in 2013, with US exports to Honduras worth an estimated US$5.3bn and imports from there valued at US$4.5bn, giving the US a goods trade surplus of US$735m (figures for trade in services were not available).

US exports to Honduras are up 62% from 2005 (pre-Cafta-DR), while imports from Honduras are up 21% over the same period, on USTR calculations. The increase in Honduran exports to the US has been dominated by the textile assembly sector (the ‘maquila’ sector), which has boosted sales to the US by 88% since 2005, according to Daniel Facussé, president of the Honduran Association of Maquiladores (Asociación Hondureña de Maquiladores [AHM]).

The US sells Honduras fuel oil (worth US$1.4bn in 2013), cotton, yarn and fabric (US$609m in 2013), electrical machinery (US$438m), special other low value shipments (US$350m), and manmade staple fibres (US$333m). The vast proportion of these are inputs for the (often US-owned) maquila industry. The five largest US import categories from Honduras in 2013 comprised – unsurprisingly – knit apparel (US$2.1bn), electrical machinery (US$617m), woven apparel (US$523m), edible fruit and nuts (mostly bananas, US$280m), and precious stones (gold, US$199m). US imports of agricultural products from Honduras were estimated at US$572m in 2013, led by bananas and plantains (US$222m), unroasted coffee (US$159m), and fresh fruit (US$57m).

Meanwhile, the stock of US foreign direct investment (FDI) in Honduras was US$881m in 2012 (latest data available), up 7.3% from 2011, and again most of that has been destined primarily for the manufacturing (i.e. maquila) sector.

• Exports to the US

Total goods exports from Central America to the US were valued at US$57bn in 2013, up 54% from US$37bn in 2006, on USTR figures. US exports of goods to the five Central American countries and the Dominican Republic were worth US$29.5bn in 2013, up 74% on 2005 (pre-Cafta-DR).

On 9 June, the US House of Representatives passed the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA). This new law imposes a suspension on past and future lawsuits related to the non-payment of some of the debts of the government of Puerto Rico and its agencies. The new law also provides for the creation of a federal oversight board that will direct a restructuring of the debt. PROMESA is due to pass through the US Senate before the end of June.

In early May, the government of Puerto Rico reached an agreement with the Ad Hoc group of creditors of the Government Development Bank (GDB) of Puerto Rico, following the declaration of a moratorium on payment of most of US$422m due to be paid by the GDB at the beginning of the month. The Ad Hoc group of six fund managers collectively account for about US$900m of the GDB’s US$4bn or so in bonds outstanding. The agreement involved a suspension by the Ad Hoc group of litigation against the government or the GDB, and a 53% ‘haircut’ on the group’s investment in GDB bonds. The deal required the participation of all GDB bondholders: however, it was recognised that this would be unlikely to happen without the passage of legislation through the US Congress that would bind all bondholders.

For a long time, an apparent solution has been an amendment to Chapter 9 of the US Bankruptcy Code. This provides protection for cities and counties that get into financial difficulties, so that they can default and negotiate with their creditors in an orderly fashion. However, Puerto Rico has not been covered by Chapter 9, because it is an unincorporated US territory.

In the meantime, PROMESA appears to offer the possibility of an orderly default. At the end of June 2016, the GDB published a report[1] that highlighted the key elements of an effective restructuring regime, many of which are incorporated in PROMESA. In the first instance, there would be clearly defined rules that would allow the restructuring of all targeted debt in one co-ordinated proceeding. All litigation would be stayed, enabling the government to ‘continue negotiations with its creditors without a race to the courthouse and the need to act unilaterally’. Instead, there would be a central arbiter to resolve disputes. There would be a mechanism to bind holdout creditors to deals that are agreed. Lenders would receive sufficient assurances that they could continue to provide funding for the government to maintain essential services. There would be official oversight by the federal government of Puerto Rico’s fiscal situation. Finally, Puerto Rico would emerge with a ‘clean slate’ and obligations that are sustainable.

Over recent weeks, negotiations with creditors have not gone well. At the beginning of February 2016, the government made a proposal that envisaged total debt service through to 2051 of US$55.38bn (and no more than US$1.7bn annually). A revised deal of 11 April 2016 envisaged total debt service through to 2067 of US$89.51bn (and no more than US$1.85bn annually). The latest deal, of 14 June 2016, involves total debt service through to 2071 of US$108.09bn (and no more than US$2.05bn annually). However, even more has been demanded by holders of the government’s General Obligation (GO) bonds and senior creditors of the sales tax collection agency, COFINA.

In the meantime, the creditors are resorting to litigation. Monoline insurers have sued in relation to Executive Order 2015-046, which gave the government of Puerto Rico the authority to ‘claw back’ certain revenues in order to pay public debts, including the GO bonds. Three separate groups of creditors have mounted lawsuits in relation to Act 21, which empowers the Governor of Puerto Rico to declare a fiscal emergency and a moratorium on the payment of certain debts. Worse, some of the GO holders are claiming that sales tax revenues earmarked for COFINA bondholders should be made available for servicing of GOs.

On Friday 24 June, Governor Alejandro García Padilla declared a suspension on payments on some debt of the Puerto Rico Infrastructure Financing Authority (PRIFA). Total payments by the government and its agencies due on 1 July amount to US$1.9bn.

Meanwhile, the latest Economic Activity Index (EAI) published by the Puerto Rico Fiscal Agency and Financial Advisory Authority (FAFAA) confirmed that the island’s economic situation remains grim. In April, the EAI fell by 0.1% in the month and it was down 1.9% year on year. In the first ten months of the current (June 2016) fiscal year, the EAI was 1.3% lower than in the previous corresponding period. Total non-farm payroll employment in Puerto Rico was 894,300, down 1.3% year on year. Power generation was 0.9% lower than in April 2015, while cement sales were down by 13.3%. The only bright spot was the FAFAA’s preliminary estimate for gasoline consumption, which was up 2.9% year on year, amid cheaper prices. Except for a brief period of stability in late 2012, the EAI has been trending downwards since mid-2005, after which the economy was hit by the expiry of Section 936 of the US Revenue Code (which provided tax breaks for companies that conducted business in Puerto Rico) and then by the global financial crisis. Back in mid 2005, the EAI had peaked at around 158 points (January 1980 = 100). It is currently down at 123.9 points.

[1] Government Development Bank of Puerto Rico, Bonistas del Patio Forum, Puerto Rico’s Fiscal and Economic Crisis, 27 June 2016.

*** CONTINUING CHALLENGES FOR TRINIDAD & TOBAGO. In its latest Survey, the United Nations (UN) Economic Commission for Latin America and the Caribbean (Eclac) has projected growth of 0.3% for Trinidad & Tobago in 2017. The International Monetary Fund (IMF), which has just completed an Article IV consultation with Trinidad, is also reporting a slight improvement. It says: “Although preliminary data shows that the economy contracted in the first half of the year on weak energy production and spillovers to the non-energy sector, the economy may be starting to turn a corner as a result of a projected recovery in gas output, though growth may still be flat or somewhat negative for the year as a whole.”

Looking ahead, the IMF says: “The economic improvement that is now beginning is projected to continue into the medium-term, notably given a pipeline of projects that will improve the supply of natural gas to the downstream energy sector.” It went on to note that oil output is growing due to the exploration efforts by state-owned Petrotrin and a refinery upgrade.

With regard to fiscal policy, the IMF “urged the authorities to undertake a medium-term, modestly front-loaded fiscal adjustment to rebalance the public finances and put debt on a sustainable path.”

*** ST KITTS TO BEAT DEBT REDUCTION TARGET. The IMF has said that it expects St Kitts & Nevis (SKN) to reach the debt-to-GDP target ratio of 60% in 2018, which is 12 years ahead of the 2030 target date set for the eight members of the Eastern Caribbean Currency Union (ECCU).

According to the Eastern Caribbean Central Bank (ECCB), the group’s combined debt-to-GDP ratio was 79.3% in 2014, 73.3% in 2015, and 72.5% in 2016. SKN’s debt-to-GDP ratio is currently standing at 63.2%.

*** GUATEMALA MOVES ON BELIZE DISPUTE REFERENDUM. On 2 August, Guatemala’s unicameral national congress ratified an international agreement calling for the electoral authorities to organise a popular consultation on whether the country’s long-standing territorial dispute with Belize should be heard by the International Court of Justice (ICJ). The move by Guatemala’s congress is seen as potentially paving the way for the resolution of a territorial dispute that dates back to 1821, when Guatemala laid claim to close to half of Belize’s national territory. The dispute has been a source of diplomatic tensions between Guatemala, Belize, and the United Kingdom (UK), given that Belize was a British territory until 1981.

In 2008, Guatemala and Belize signed a bilateral agreement under which they pledged to hold referenda in each country to ask if the Guatemalan and Belizean populations agreed to refer the dispute to the ICJ so that the international court could issue a definitive resolution on the dispute, but the agreement had not been ratified by Guatemala’s legislature until now.

The legislatures in both Guatemala and Belize had previously agreed that the proposed referenda should not be held simultaneously as had been stipulated in the 2008 agreement. This point had been pushed by Guatemala amid concerns that tensions could be exacerbated if the two countries ran simultaneous referendum campaigns. The initiative approved by Guatemala’s congress calls for the supreme electoral court (TSE) to organise a popular consultation on whether the territorial dispute with Belize should be taken to the ICJ. Although no date has been set by congress, the speculation in the local press is that this could be held before the end of the year. Meanwhile, Guatemala’s Foreign Minister Carlos Raúl Morales has said that he expects that Belize will be able to hold its referendum next year.

Micro, small, and medium-sized enterprises (MSMEs) play an important role in developing economies, and a series of regional initiatives in Central America are seeking to improve their prospects following the shock of the coronavirus (Covid-19) pandemic.

A report dated 25 August from the Centro para la Promoción de la Micro y Pequeña Empresa (Cenpromype), an MSME-focused organisation that is part of the Central American Integration System (Sica), revealed that the pandemic had caused a sharp drop in income for MSMEs. The authors spoke to 1,351 business owners in Costa Rica, El Salvador, Guatemala, Honduras, and Panama, reporting that 64.7% of respondents said their sales had fallen in 2020, 19.3% had maintained sales, and 16% improved sales. The average drop in sales was 37.8%, according to the report, and young businesses that had been operating for ten years or less were hit harder in terms of investment and debt levels. On the flip side, 29.8% of MSMEs reported that Covid-19 has had a positive effect on productivity while 25.6% reported improved profitability.

The report also revealed that 29% of MSMEs asked for access to lines of credit in 2020 to deal with the effects of pandemic. Of that number, 47% did not receive financing, 23% received financing on the same terms as previous years, and 17% received financing with tougher conditions than previously, while 13% said they were still waiting for a response from creditors. “There is a very limited offering of financial resources that deal with the specific needs of MSMEs,” said the study. 

The need to boost financial inclusion through the use of different instruments was addressed at a high-level Cenpromype forum which took place from 20-22 July. Supported by the US State Department and Taiwan, the forum agreed measures to promote coordination between public financing bodies and MSME business groups. Participants also outlined plans to examine the possibility of creating regional innovation labs in order to transform the MSME sector in Central America and adapt it to global demands, as well as improving knowledge sharing with other countries on regulation and innovation in financial technology.

Assistance for MSMEs also came on 21 June in the shape of an agreement between the Central American development bank (BCIE) and the US government’s International Development Finance Corporation (DFC) for a new US$100m credit line. It will provide funding to financial intermediaries with a focus on lending to businesses in Guatemala, Honduras, and El Salvador, according to a press release. The US Agency for International Development (Usaid) will “maximize the impact of the funds” by providing technical assistance to businesses and lenders. “MSMEs contribute 33% of the region’s GDP and are a key driver in creating jobs, employing around 45% of the workforce,” said BCIE’s executive president Dante Mossi. “These investments will generate more employment in our region.”

And these efforts also received a boost with the release of a Cenpromype assessment of MSMEs in the region on 28 June. The document is designed to provide an overview that will help national and international bodies better focus initiatives that affect the sector. Key areas of improvement are related to workers qualifications and their adaptation to the demands of the labour market, as well as improving productivity in order to increase salary levels, according to the report.

Date: 19 September.

Type: First round of the legislative and presidential elections. The second-round of legislative elections and the presidential run-off are scheduled for 21 November, along with municipal and local elections.

Main contenders: Parti Haïtien Têt Kalé (PHTK), of President Jovenel Moïse; Ayiti An Aksyon (AAA); Fanmi Lavalas (FL), of former president Jean-Bertrand Aristide [1991; 1994-1996; 2001-2004]; Organisation du Peuple en Lute (OPL), an FL splinter group; Fusion des sociaux-démocrates; Inité; Secteur Démocratique et Populaire National; among others.

An attempt to break the political gridlock

Jovenel Moïse, an agricultural businessman and political novice, was inaugurated as president on 7 February 2017. This marked a return to constitutional order after Haiti had been without an elected president from February 2016 to February 2017 due to delayed elections. Political gridlock has ensued, resulting in the failure to hold legislative elections in October 2019. As of 13 January 2020, the terms of the 119-member chamber of deputies and two-thirds of the 30-member senate expired without newly elected officials to take their places.

The country is consequently without a functioning legislature, and President Moïse, who is constitutionally barred from seeking re-election, has been ruling by decree since then. He remains deeply unpopular, and over the past two years he has faced mass protests and calls to resign. This stems from alleged corruption (the alleged embezzlement of funds from Venezuela’s discounted oil initiative Petrocaribe); rocketing inflation; insecurity - including claims that the government has colluded with gangs; and perceived incompetence.

Staging the elections has been a key demand of the international community, and on 7 January the director of Haiti’s electoral commission (CEP), Max Délices, confirmed the electoral calendar. However, this remains contentious for various reasons. Opposition groups are demanding that Moïse step down this February rather than in February 2022 as the electoral calendar would appear to suggest, and a transition government take over. Presidential terms are five years, but these groups maintain that the current five-year term began on 7 February 2016 when Moïse’s predecessor Michel Martelly (2011-2016) officially stepped down.

The opposition also objects to the nine-member CEP tasked with overseeing the vote. In September 2020 Moïse appointed the CEP, but this proved controversial due to the fact that it did not include representatives of key sectors such as the Episcopal Conference and universities (as stipulated by the constitution). The other big controversy was its mandate which included organising a referendum on a new constitution set for 25 April. The opposition, legal experts, and human rights groups claim such a vote is illegal, citing Article 284.3 of the 1987 constitution which states that “any popular consultation which seeks to modify the Constitution by way of a referendum is formally forbidden”. Moïse’s advisers however insist that they are not reforming the current magna carta but creating a new one, making the ban irrelevant.

Such was the controversy over the new CEP - both its representativeness and its mandate - that the supreme court opted not to swear in its members, but Moise then installed it regardless. This has left even PHTK members warning the controversy will hinder the ability to prevent an electoral crisis. The opposition has already announced protests and a “general uprising” to begin on 1 February in rejection of the elections and referendum. The prospect of further unrest comes as the socio-economic situation exacerbated by the impact of the coronavirus (Covid-19) pandemic, which is forecast to shrink Haiti’s GDP by 3% in 2020, looks set to worsen.

Food insecurity

In October 2020 the UN Food and Agriculture Organization (FAO) and World Food Programme (WFP) released an early warning analysis of acute food insecurity hotspots which included Haiti. Analysis conducted in September 2020 estimates the number of people in Haiti facing a food crisis or emergency between August 2020 and February 2021 at approximately 4m people (out of 11m), up from 3.67m in the October 2019-February 2020 analysis. A further increase to 4.4m is projected between March and June 2021.

COSTA RICA | Exports and investment booming. “Our economy has become an ever-more powerful jaguar,” Costa Rica’s President Rodrigo Chaves said on 3 April, referring to growth in exports and foreign direct investment (FDI). The foreign trade minister, Manuel Tovar, said exports had increased by 8% to US$2.96bn in the first two months of 2024 compared with the same period a year earlier, with every sector expanding (the food industry by as much as 20%), while FDI jumped by 24% to a record US$3.92bn over the same period. The manufacturing sector received the most FDI – 61% of the total – followed by the service sector (25%), tourism (7%), and real estate (7%).  

BRAZIL | S&P downgrade. On 24 March the credit ratings agency, Standard & Poor’s (S&P), announced it was downgrading Brazil’s sovereign debt rating from BBB to BBB-. Though anticipated, the timing of the decision surprised some market watchers and government officials, who expected the news to come after October’s elections. The fact the downgrade has come now shows the extent of the gloom pervading market analysis of Brazil’s future growth prospects.

Brazil had its long-term debt rating downgraded to BBB-, the agency’s lowest investment-grade rating. It now ranks below Chile, Colombia, Mexico, Panama and Peru in the region. According to the note the agency published along with the new rating, “the downgrade reflects the combination of fiscal slippage, the prospect that fiscal execution will remain weak amid subdued growth in the coming years, a constrained ability to adjust policy ahead of the October presidential elections, and some weakening in Brazil’s external accounts”. Fiscal credibility has been “systematically weakened” following cuts in the government’s main budget target, the agency said, and loans by state-run banks had “undermined policy credibility and transparency”.

Eduardo Campos, the presidential candidate for the opposition Partido Socialista Brasileiro (PSB), told journalists on 25 March that Brazil’s fundamentals remained largely sound but that trust in the present government was low. “Brazil has much better fundamentals than many countries, it is on track,” Campos said. “What we are confronting I think is, above all, a crisis of expectations and I think we will see the solution when the people have their say in the elections in October.”

URUGUAY | Resenting Brazilian investment. On 20 March Luis Alfredo Fratti, the president of Uruguay’s national meats institute Inac), said that he was concerned with the growing presence of Brazilian firms in the local meat processing industry. Fratti’s comments followed an announcement by Brazil’s Minerva Foods that it had agreed the purchase of the Carrasco abattoir for US$37m. The purchase turns Minerva, which already owns one abattoir in Uruguay, into the second largest beef processor and exporter in the country, with an 18% market share, behind Marfrig (also Brazilian), which has a 21.8% market share.

The deal will also allow Minerva to enter the local sheep meat processing sector for the first time. Fratti said that Minerva’s acquisition of Carrasco will result in further concentration of the local beef processing industry in the hands of Brazilian capital, pointing out that Brazilian firms (besides Minerva and Marfrig, Brazilian food processing juggernaut JBS also owns abattoirs in Uruguay) will now control 41% of this sector’s operations.

Fratti said that it was a reason for concern for the government as “if we could choose, it would be preferable to have multinational firms from different nationalities [in the sector], but we can’t make that choice”. In particular, Fratti explained that just like many local producers, Inac is also concerned with the prospect that the Brazilian firms could start dictating local market policies, such as setting price levels or adopting certain production limits designed to serve Brazilian, rather than local, economic interests.

As soon as Minerva announced its plans to acquire Carrasco earlier this month, Uruguay’s influential rural federation (FR) issued a public statement voicing its concern that the concentration of the country’s abattoirs in foreign hands was “severely discouraging” local beef cattle breeders. According to the FR, in recent months its members have found it difficult to sell their cattle to local abattoirs as the Brazilian-owned firm in particular appears to be sourcing cattle from across the border. The FR statement warned that the “negative effects” of this situation would “not only harm producers but also all workers linked to the beef industry”.

In a bid not to stoke tensions further, Fratti said that the fact that Brazilian firms are investing in Uruguay’s meat industry suggests that they see it as a good investment opportunity and that in the long-run such investments would be beneficial for the country. Indeed Fratti recalled that a few years ago the Uruguayan government itself “asked Brazil to look to invest more in Uruguay”. He added, “but perhaps we are so small that now we have to tell them ‘yes, invest, but not so much!’”.

• Banco do Brasil

On 22 March Brazil’s state-controlled Banco do Brasil announced that it had raised US$1bn from a syndicated loan with a group of 22 other banks. This is the first time that Banco do Brasil, Latin America’s largest bank, has resorted to such an operation in a bid to raise capital. In recent years, syndicate loans have become a popular alternative way for banks and other firms to raise funds quickly as these operations take considerably less time to be concluded than a bond issue. According to a Banco do Brasil statement, the bank obtained the loan in two tranches- a US$700m three-year loan at an interest rate of 1.35 percentage points higher than the six-month London Interbank Offered Rate (Libor) and a US$300m four-year loan at an interest rate 1.5 percentage points higher than Libor.

On 10 December, the Office of the US Trade Representative (USTR) announced phased-in tariffs on Nicaraguan imports.

The tariffs will be phased in over two years on all imported Nicaraguan goods that do not originate under the Dominican Republic-Central America-US Free Trade Agreement (Cafta-DR). From 1 January this year the tariff will be set at 0%, before ramping up to 10% on 1 January 2027 and 15% on 1 January 2028.

According to the USTR, the tariffs are designed “to address Nicaragua’s acts, policies, and practices related to abuses of labor rights, abuses of human rights and fundamental freedoms, and dismantling of the rule of law”. The tariffs will stack with others, such as an 18% reciprocal tariff currently imposed on imports, and the timeline and tariff rates are subject to change if Nicaragua shows “a lack of progress in addressing these issues”. 

While the move is significant given the fact that the US remains Nicaragua’s largest export market, despite deteriorating relations between the governments of the two nations in recent years, there is still plenty of scope for Washington to take further action. For example, the tariff rates are far lower than the 100% tariff floated by the USTR in October, and the exception for goods originating under Cafta-DR constitutes a significant carve out. 

The US could increase tariffs whenever it wants, and it could also move to expel Nicaragua from the Cafta-DR agreement, but so far officials have not taken stronger action. The USTR said that the move “balances the need for action and the importance of limiting disruption for U.S. businesses,” but officials may also be moving cautiously to avoid triggering a wave of mass immigration to the US southern border.

It is also possible that more concerted action to pressure the authoritarian government led by co-presidents Daniel Ortega and Rosario Murillo simply hasn’t been a priority so far during US President Donald Trump’s second term in the White House, although his recent aggressive action to remove Venezuela’s now former president Nicolás Maduro (2013-2026) will likely worry the Frente Sandinista de Liberación Nacional (FSLN) government as it provides further evidence that Trump is willing to disregard international law in pursuit of his goals.

These tariffs, and potential future action to exert pressure on the Nicaraguan economy, could also benefit regional peers such as El Salvador and Guatemala, both of whom recently signed bilateral trade deals with Washington which would make their own exports comparatively cheaper in the US market. Shifting trade relationships could also encourage manufacturers, such as those in the textile industry, to move existing capacity from Nicaragua to those regional peers.

Trade deficit

On 27 November Nicaragua’s central bank (BCN) released new figures showing that the country’s exports totalled US$6.81bn in the first nine months of 2025, up 15.8% on the same period the previous year. Growth was driven by a 27.6% increase in goods exports and a 1.6% increase in free zone goods. Goods exports in turn were driven by a 49.2% increase in mining exports (which totalled US$1.46bn), and a 43.1% rise in agriculture exports (US$1.12bn).  Meanwhile total imports reached US$8.52bn in the first nine months of the year, up 6.2% on the previous year. This resulted in a trade deficit of US$1.70bn in the first nine months of 2025, down 20.2% on the same period in 2024.

The government is struggling to find ways to stimulate the economy, with concerns that the country is headed for a sharp contraction this year. On 10 April the central bank (BCP) revised down its forecast for the year from 3.7% to somewhere between 0% and -2.5%. The BCP said that the severe summer drought and the recent outbreak of foot-and-mouth disease had combined to severely affect the agricultural sector, which accounts for up to one-fourth of Paraguay’s GDP. The BCP now expects the agricultural sector to contract by 18.3% in 2012. Soya production fell an estimated 49.5% in the 2011/2012 harvest, resulting in estimated losses of US$1.8bn. Meanwhile the beef sector lost access to some of its more profitable foreign markets and is expected to post losses of a similar magnitude (US$1.0bn). The government has announced that it plans to substantially increase its spending this year by implementing an ambitious US$650m infrastructure development programme. However it appears that the implementation of the scheme is slower than expected and the private sector is getting nervous.

Members of Paraguay’s construction chamber (Capaco) met the labour minister, Humberto Blasco, on 11 May to express concerns about the delays in the execution of planned public works projects. According to Capaco, if the delays continue there is risk of “massive job losses” in the construction sector, which could affect up to 40,000 workers. Blasco recognised that weaker activity in the construction sector had already been affecting the unemployment rate; and said that he would take these concerns to his fellow ministers. He pointed out that the government has already ordered all ministries to expedite the disbursement of funds destined for public works projects. However Blasco pointed out that the implementation of these projects depends on “the agile management of each ministry’s resources so that projects can be executed as quickly as possible”.

Propped up by steady consumer spending and a decent performance by the agriculture sector, Mexico’s GDP rose at its fastest pace in two years in the third quarter in seasonally-adjusted terms. This created some optimism that, despite the severe economic toll of the continued oil price rout, a recovery is around the corner in 2016.

Real GDP rose by 0.8% quarter-on-quarter in the June-September period, according to the national statistics institute (Inegi), the best result since the third quarter of 2013, while in year-on-year terms, it expanded by 2.6%.

In the quarter-on-quarter comparison, agriculture was the best performing sector, posting growth of 2.3% over the second quarter. The services sector, as well as industry, rose by 0.8%; while the services sector has performed steadily all year, the latest result was a notable improvement for industry, which had stagnated in the first half.

In year-on-year terms, agriculture again posted the best result, with firm growth of 4.1%. Services expanded by 3.3%, with broad-based growth led by mass media (9.3%), hotels and restaurants (7.1%), culture and sport (5.3%), and retail and wholesale trade (4.8%). Analysts attributed the strength of hotel and restaurants to strong tourism activity this year, helped by a weaker peso/US dollar exchange rate, which makes Mexico cheaper for US tourists. By contrast, social services (education, health and government) posted only moderate growth in the third quarter (of less than 1% overall), likely reflecting a slowing of social spending after it was front-loaded in the first half ahead of midterm elections in June.

While the industrial sector registered growth of 1.2% in the third quarter, it was not broad-based. While utilities, construction and manufacturing were all in positive territory, manufacturing in fact posted its weakest year-on-year growth since 2013, at 2.8%, as the sector continues to perform erratically in line with the stop-start performance of Mexico’s main economic partner, the US. Meanwhile, mining - which includes the oil and gas sector – contracted by 5.6%, in line with the oil price crash and continued weakness in production.

Despite continued strong headwinds in the form of rock bottom oil prices and continued weakness in the key manufacturing sector, officials seized on the latest data with gusto. Deputy finance minister Fernando Aportela reaffirmed the government’s forecast for overall GDP growth of between 2% and 2.8% this year, rising to a range of 2.6%-3.6% in 2016, which is a little higher than the private sector consensus of between 2.8% and 3%. “In a complex, volatile environment, the Mexican economy is growing more than in the same period a year ago, at a faster pace than in the first half of this year and above analyst estimates. The economy has been driven mainly by the dynamism of the domestic market”, Aportela noted. The central bank (Banxico) governor, Augustín Carstens, was a little more cautious, attributing the “moderate” third quarter growth to a faster expansion in retail sales and consumer credit. On 4 November, Banxico in fact said that the economy would grow by 1.9%-2.4% this year, slightly moderating its previous forecast of 1.7%-2.5%.

The official hope is that a recovery will set in during 2016 on the back of fairly robust domestic fundamentals (including low inflation – see box below), and continued strengthening of the US economy, which should spur exports and investment. Investment should also rise in line with the continued liberalisation of Mexico’s energy and telecommunications sectors, as per the government’s flagship sectoral reforms, which over the next few years will generate sizeable new investment inflows.

Inflation remains low, despite heavy peso drop

The headline inflation index came in at 0.51% in the month of October, the sharpest monthly increase since November 2014. The 12-month rate remained low at 2.48%, however.

The October monthly result was driven up by a 3.3% month-on-month rise in energy prices, as many cities ended their lower seasonal summer tariff schemes. The price rise contributed almost a third (0.31%) to the headline result. Other contributory factors included a rise in prices for new cars and holiday packages – both of which are affected by the pass-through effect of the peso's depreciation against the US dollar. By contrast, gasoline prices continue to benefit from much lower fuel import costs, while the effects of the government’s liberalising reforms of the telecommunications sector are now being felt directly by Mexican consumers in the form of lower mobile phone tariffs, as providers race to offer more competitive packages.

On the year-on-year comparison, the 12-month inflation rate of 2.48% was a new record low. According to Inegi, this reflected a sharp fall in non-core inflation to 2.52% (from 2.96% in September), the lowest rate since March 2011, thanks largely to lower energy prices and, in turn, to significantly lower prices for some foodstuffs. Core inflation, by contrast, edged up a notch to 2.47%, from 2.38% in September, which Inegi said reflected the pass-through effect of the peso's depreciation. However, non-core and core inflation were similar in October – which analysts note is a positive, as it helps to anchor inflation expectations.

The consensus is for inflation to average less than 3% this year, before rising back towards 3.5%-4% in 2016, in line with a stronger economic recovery.

Both Banxico and private economists have emphasised the point that the pass-through to inflation from the peso's depreciation is relatively moderate compared to the sharp drop in the currency over the past year. This suggests that inflation has ‘decoupled’ from the peso.

By way of illustration, the peso has fallen by 17% against the US dollar, in the past year, but in the same period annual inflation has fallen from 4.2% to a record low of 2.4% in November. Citing calculations by Bank of America, financial wire Bloomberg on 24 November noted that, “the currency’s impact today is almost imperceptible, with each 1% decline in its value fuelling less than 0.05% of inflation. Two decades ago, when consumer prices soared over 20% in just four months, after the government devalued the exchange rate, the peso-to-inflation ratio was 10 times higher”.

While analysts are somewhat divided as to the causes, (there are both positive and negative interpretations, ranging, on the positive side, from Mexico’s hard-won inflation policy credibility and much stronger competition in the domestic retail market, to the negative fact that growth is still weak, depressing prices), this decoupling effect is important, as it not only protects consumer purchasing power but also affords the local monetary policy authorities much greater flexibility. Banxico has held its benchmark interest rate at a record low of 3% since last year, in stark contrast to the likes of successive hikes in Brazil and Colombia, for instance. Bloomberg notes that “Banxico in November released a study this month showing Mexico has the lowest pass-through ratio among major Latin American countries…And central bank Governor Augustin Carstens declared [in a recent op-ed] that the peso-inflation link is, by and large, dead”.

Indeed, the peso recently touched a record low of M$17.3/US$1, as global oil prices continue to falter, although it has since come back in slightly, trading at about M$16.5/US$1 as we went to press on 25 November. End box

• Agri-food sector thrives

According to Inegi, Mexico’s agri-food export basket was valued at US$20.3bn in the first nine months, an increase of 5.8% year-on-year over the same period of 2014. Mexico accumulated an agri-food trade surplus of US$1.1bn with the rest of the world in the same period.

• Pemex downgraded by Moody’s

Having put Mexico's state-owned oil company Pemex on downgrade watch in August, Moody’s Investors Service followed through on 24 November, citing lower earnings and rising debt levels. The ratings agency cut Pemex’s global rating to 'Baa1' from 'A3', two notches above the minimum investment grade. “Moody’s believes that Pemex’s credit metrics will deteriorate further in the short to medium term as oil prices remain depressed, production continues to drop, taxes remain high, and the company’s capex needs are financed with debt”, Moody’s said. Pemex, in response, listed measures it has taken to improve its financial position, including almost US$4bn in budget cuts this year, the sale of noncore assets, and the search for strategic partnerships as per the government’s flagship energy reform. Moody’s noted that Pemex negotiations with the national oil workers’ union will allow the company to reduce its unfunded pension liabilities, which it said should improve Pemex’s capital structure, if not its immediate cash position.

The European Union (EU) is part of the wider global rush to secure rare earth supplies and has expressed interest in working with Latin American countries to reduce their dependence on China. Brussels has identified 34 critical raw materials (CRMs) most of which have to be imported. Twenty-five of those on the list can be found in South America. EU documents stress the fact that CRMs are strategically sensitive since they are essential for modern industry, car manufacturing, mass communications, weaponry, and many other applications. But they also make the case for CRMs as essential to improve European competitiveness.

In 2023 the EU signed a Memorandum of Understanding (MoU) with Chile and Argentina on sustainable commodity value chains. In 2024 the EU ratified its Interim Trade Agreement (ITA) with Chile, pointing out that this was its first trade agreement to include a separate chapter on energy and raw materials. The EU has also signed a trade agreement with the Mercosur countries (Argentina, Brazil, Paraguay, and Uruguay) that should enable increased trade in critical minerals. Most of the CRMs entering Europe from South America come from Brazil, but 79% of the EU’s refined lithium comes from Chile.

According to the International Energy Agency (IEA) demand and prices for lithium (along with nickel, cobalt, and copper) will surge as the energy transition develops between now and 2050. In a speech to the EU parliament in November 2024 EC President Ursula von der Leyen identified three policy pillars – closing the innovation gap; developing a common plan for decarbonisation and competitiveness; and strengthening EU economic security. Officials say the third pillar involves achieving stable and secure supply chains, especially for CRMs.

The wider context is a three-way struggle for global influence and security between the US, China, and Europe. For the last two decades Chinese trade with Latin America has been increasing. At present the US remains Latin America’s top trade partner, followed by China in second place and the European Union in third. China-Latin America trade has surged from US$12bn in 2000 to US$315bn in 2020. In critical raw materials alone China is now Latin America’s top trade partner.  

Canal budget presented. On 16 July Panama’s executive approved the US$2.4bn budget for fiscal year 2014 (1 October 2013-30 September 2014) for the Panama Canal, a 1.58% increase on the previous budget. The budget now goes to the national assembly for final ratification. According to a report published by the Panama Canal Authority (ACP) on 25 July, the US$5.2bn Panama Canal expansion project is now 60.4% complete since work began in 2007. The report cites as important milestones the fact that “both entrances of the Panama Canal are ready for bigger ships, since the deepening and widening of the Atlantic and Pacific access channels have been completed. The dredging of Gatun Lake is expected to be completed by the end of this year. The Pacific access channel has reached the design depth and the dam that will divide the new channel from Miraflores Lake is under construction. The third set of locks project registers 50 percent progress. The new lock complexes in the Pacific and Atlantic sides will feature three chambers, three water-saving basins per chamber, a lateral filling and emptying system and rolling gates”. The report also notes that the first four new lock gates, which have been constructed in Italy, are due to arrive this month. Each one of the 16 gates required will weigh an average of 3,300 tons. Currently six months behind its eight-year project schedule, the ACP anticipates that commercial transits through the newly expanded Canal will begin in mid-2015.

Proposed budget. On 31 July Economy Minister Frank De Lima presented the government’s proposed 2014 State budget of US$17.7bn, an 8.9% increase on this year. Of this 45.1% will go to investment and the rest will cover operation costs. The budget proposal is based on GDP growth of 7.0%, which the government describes as a “conservative” estimate. According to De Lima, US$8.8bn will go to the development of social services aimed at reducing poverty. The sectors to receive the biggest assignations include health (US$3.5bn); education (US$1.9bn) and social security (US$1.8bn).

Following a record result in 2015, Mexican automotive exports – roughly three quarters of which are destined for the US – have fallen back in recent months, even as demand in the US economy continues to recover. In April, Mexico’s total automotive exports fell by 15.6% year on year, with a 9% fall in exports to the US.

This rather incongruous result is explained by the fact that even though US demand has recovered, consumer demand in the US for light vehicles (i.e. small passenger cars) is falling.

In part, the sharp fall in petrol prices has prompted a demand shift in the US away from small cars and family saloons back towards larger pick-up trucks and sports utility vehicles (SUVs), with demand for these ‘gas guzzlers’ up by 11% in April. As light vehicles dominate Mexico’s auto export basket, these changing demand patterns are negatively affecting locally based manufacturers. Ironically, the US recession following the 2008 financial crisis had benefitted Mexico’s carmakers to a degree, as US consumers traded down to smaller vehicles.

However overall automotive sales in the US slowed in May, prompting concern that last year’s record sales growth is cooling off. It is also the case that other important markets for Mexico-based manufacturers are still weak – most notably Germany in Europe and Brazil in Latin America. Sales to Germany, dominated by Volkswagen’s ‘Beetle’ and ‘Jetta’ models, fell by 36.3% in the first four months of 2016, with sales to recession-hit Brazil down by over two-thirds (64.7%).

Exports typically account for about three-quarters of local production and so despite continuing strong domestic demand, the impact on the sector is heavy. Thus with export demand so low, Mexico’s total auto production in the first four months was down by 5%, with the likes of Fiat-Chrysler, Ford and Mazda, all focused on smaller cars, particularly affected. The impact on the wider economy will also be felt – as auto exports account for about a quarter of the total export basket.

And there is no sign of a change in the current negative trends in the export-dependent sector. According to latest data for the month of May from Mexico’s association of automotive manufacturers (Amia), total exports shrank by 7% in the first five months of the year, with total production falling by 4.6% to 1.35m units. Production has thus fallen for four consecutive months, the weakest result since 2009.

In the internal market, domestic new (passenger) car sales increased by 16.8% in the first five months of 2016, to 587,320 units, according to Amia. Of these new sales, 44% were made in Mexico and 56% abroad. Following a record year in 2015, with total sales of 1.35m units (cars and light trucks), Amia cited continued robust domestic demand, stronger price competition between manufacturers, better credit availability and continued efforts to limit the over-supply (effectively dumping) of used US cars in Mexico under the North American Free Trade Agreement. Still, this is not enough to offset the shifting winds in external markets.

AAPC-AMIA-CVMA joint statement ahead of ‘Tres Amigos Summit’

On 28 June, ahead of the North American Leaders’ Summit between Canada’s Prime Minister Justin Trudeau and Presidents Barack Obama of the US and Enrique Peña Nieto of Mexico (also known as the ‘Tres Amigos Summit’), the Canadian, US and Mexican automotive industry associations issued a joint statement urging greater integration and trade policy cooperation.

“The auto industry serves as a driving economic force in the integrated North American economy. Automotive products account for 20% of total North American trade, making automotive goods the single largest category of traded products, and this sector supports millions of American, Canadian and Mexican jobs. Together we are more competitive than we ever would be apart.

“As our leaders gather for these historic meetings, we encourage them to adopt policies that will expand economic growth and prosperity. As each of the three countries negotiate trade agreements with third parties, we urge our governments to coordinate on issues like rules of origin, including North American cumulation, and addressing non-tariff barriers to ensure that these trade agreements fortify the North American automotive supply chain and increase North American auto exports. We also call on our governments to take further steps to eliminate Customs procedures that impede efficient vehicle and auto parts commerce between our three countries. Advancing these priorities will promote the competitiveness and continued growth of the North American industry, and the millions of jobs it supports across the continent.”

It is now almost five years since the Caribbean Community (Caricom) endorsed the ‘Vision 25 by 2025’ programme (also known as 25x25): a commitment to reduce the region’s large food import bill by 25% by the year 2025. Has it succeeded?

Caricom Assistant Secretary-General Wendell Samuel, attending the Caribbean Week of Agriculture in St Kitts and Nevis at the end of September, was upbeat. He stressed that food and nutrition security is not “optional”. He called the original target-setting “a bold move” adding “I am pleased to let you know that the programme has borne fruit and is continuing to provide us with green vegetables and fresh meat”. Samuel went on to list examples of regional cooperation in food production and trade including a US$100m Regional Agriculture loan fund, and expanded soya and maize storage facilities, as well as investment in greenhouse technology and cold storage infrastructure.

Despite this it is still somewhat unclear how much real progress has been made. According to one Caricom report the reduction in the total food import bill since 2018 is of the order of 12%, about half the target but still significant. Caricom has also said that 82% of targets for selected commodities have been met, but the position relative to all food imports is not fully known. While measurements are likely to remain patchy, the target does appear to be driving more self-reliance and efficiency in food production and trade.

Food security initiative 25x25 extended

In February 2025, Caricom announced that it was extending the food security initiative 25x25 until 2030.

URUGUAY | Looking to develop energy export market. On 11 November Uruguay’s industry, energy & mining minister (Miem), Roberto Kreimerman, said that the government was actively looking for the support of private energy producing firms for its plans to export electricity to Brazil and Argentina, the two largest markets in the Southern Common Market (Mercosur) trade bloc, in the near future.

Uruguay’s electricity grid is fully connected to those of both Argentina and Brazil. In fact, the three countries regularly sell electricity to each other in a spot market any time that either of them is experiencing a shortfall in production or a sharp surge in consumption.

In the past few years, Uruguay has been the one that has experienced a shortfall in electricity production as a result of droughts that have affected its hydroelectric production capacity.

But this year things have turned around with a drought affecting southern Brazil, and Argentina struggling to meet its domestic electricity demand amid a current heatwave. This has resulted in Uruguay selling some of its electricity production to its neighbours (mostly Argentina) to the tune of US$35m up to August, according to the latest official figures.

Kreimerman said that the government’s plan now is to promote electricity generation in Uruguay so as to be able to better supply the regional market. In this context Kreimerman and Gonzalo Casaravilla, the president of Uruguay’s state-owned energy firm (UTE), said that Uruguay is “strongly banking” on boosting its national renewable energy production be it via hydraulic, thermal or other means; and that the government was looking to work with private firms to achieve this.

Kreimerman’s comments came as he opened the 2014 Ibero-American energy congress (IntegraCIER) held in Uruguay’s tourist resort of Punta del Este on 10-12 November.

The event was attended by over 250 energy firms from Latin America and the Iberian peninsula, as well as government representatives from across the region, all of whom discussed issues such as ways to promote the integration of the regional energy market.

The IntegraCIER congress came after Uruguay’s President José Mujica paid a visit to his Brazilian counterpart, Dilma Rousseff, on 7 November to discuss bilateral issues, including joint plans to upgrade the electricity interconnection system.

After the meeting Mujica said that Rousseff had agreed with him that all Mercosur countries should “advance towards greater integration of our production chains”.

PARAGUAY-CHILE | Binational chamber of commerce revived. On 13 November Chile’s ambassador to Paraguay, Alejandro Bahamondes, announced the reactivation of the Paraguayan-Chilean chamber of commerce following 30 years of inactivity.

In a press conference, Bahamondes said that as a result of the growing interest in increasing bilateral trade in both countries, businessmen from the two nations had decided to get together to reactivate the trade promotion body. Highlighting the interest on the part of Paraguayan producers to increase their exports to Chile and of Chilean investors to invest in Paraguay, Bahamondes, who was elected as the new honorary president of the chamber, said that “all the conditions are in place to increase the level of trade between the two countries as well as investment flows”.

Indeed Bahamondes revealed that a delegation of Paraguayan businessmen (including Gustavo Olmedo, elected as the chamber’s president) led by Paraguay’s industry & trade minister, Gustavo Leite, is due to travel to Chile in the last week of November to establish contacts with Chilean businesses and stimulate trade opportunities in sectors of special interest such as retail, food, pharmaceuticals, health, education, forestry, ship-building and finance.

• Argentine beef exports to China soar

On 18 November the Argentine press reported that exports of frozen Argentine beef to China increased by 89% between January and September this year to some US$50m, making China the third largest beef export market by value behind Russia and Chile. Argentina gained access to the Chinese market in July 2012 after negotiations involving government officials and the private sector, represented by the Argentine institute for the promotion of beef, resulting in the signing of an agreement. The increase in exports to China has helped to boost the entire sector. It is estimated that in October 2014 alone 22,000 tonnes (t) of Argentine beef has been exported to all markets, compared to the average of 17,100t of the previous eight-month period.