Tuesday 29 November 2022

The business climate in Latin America improving but remains very low

The FGV warned that these data indicate that the scenario for the next six months "tends to slow down in the region."

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29 November 2022 - At The Banks - BCCR

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Q REPORTS (EFE) The climate for business in Latin America rose in the fourth quarter of 2022 after three consecutive falls, but remains at one of its lowest levels in the last six years, according to the indicator released this Wednesday by the Fundación Getulio Vargas (FGV) – Getulio Vargas Foundation  – of Brazil.

The Índice de Clima Económico (ICE)  – Economic Climate Index – of Latin America, which was prepared with surveys of 138 specialists from 15 countries, rose from 54.7 points in the third quarter to 66.5 points in the last quarter, for which it continues ten points below its average in the last ten years (77.6 points).

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Despite this improvement, it is the third lowest level measured in the last six years, only above that registered in the third quarter of this year and the negative record of just 40 points to which it fell in the second quarter of 2020 for the pandemic.

According to the FGV, the improvement was mainly due to the strong increase in the current situation index, by which economists evaluate the situation, since the expectations index, which measures the outlook for the next six months, did not rise as strongly.

While the current situation index rose from 48.8 points in the third quarter to 67 points in the fourth, its highest level in the last four years, the expectation index went from 65.5 points to 66.1 points.

The FGV warned that these data indicate that the scenario for the next six months “tends to slow down in the region.”

“The projections of a lower GDP growth rate in 2023 compared to 2022 corroborate the caution of specialists in relation to the coming months,” added the Foundation.

The optimism of economists regarding the situation in Brazil also contributed to the recovery of the regional situation, whose economic climate index jumped from 54.5 points to 84.5 points, the highest level in just over a year.

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In addition to Brazil, another four of the ten countries analyzed (Bolivia, Mexico, Paraguay and Peru) registered increases in their economic climate index.

Despite this, only two (Paraguay and Uruguay) are in the area considered favorable (more than 100 points).

Paraguay replaced Uruguay as the country with the best business climate in the region, with 114.7 points. Uruguay (108.2 points) remained in second place.

Brazil (84.5 points) jumped to third place, where it continues in the unfavorable zone along with Bolivia (71.4), Colombia (68.6), Ecuador (65.0), Mexico (62.7) and Peru (57.5).

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And in the most critical area remain Chile (34.5) and Argentina (21.8), whose indicators worsened, as well as Venezuela, which was no longer evaluated.

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Q Costa Rica
Reports by QCR staff

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