Economic indicators are improving in many countries.

(I). Brazil

The mayor of Ribeirão Preto, Brazil, Nogueira, recently said that Brazil is rich in natural resources, and with strong external demand for Brazilian products influenced by the return to growth in the global economy, coupled with the continued promotion of the new crown vaccination, some of Brazil’s economic indicators are improving day by day and socio-economic activity has recovered.

In the second quarter of this year, Brazil’s gross domestic product (GDP) grew by 12.4% year-on-year, which was the largest year-on-year increase since 1996, while in the first quarter of this year Brazil’s GDP was already higher than in the fourth quarter of 2019 (before the outbreak). A report released by the Brazilian Ministry of Economy in mid-July projected Brazil’s economy to grow at 5.3% and 2.51% this year and next, respectively, up from the 3.5% and 2.5% forecast in May. Of Brazil’s three pillar industries – agriculture and livestock, industry and services – only the service sector has yet to return to its pre-epidemic levels.

(II). Mexico

Mexico’s economy has also returned to better-than-expected growth. Mexico’s Deputy Finance Minister Yorio said that Mexico’s economic growth is expected to reach 6% this year, an increase of 0.7 percentage points from the previous forecast. Data recently released by the Mexican National Institute of Geography and Statistics showed that Mexico’s real GDP grew by 6.9% year-on-year in the first half of this year, including 19.56% year-on-year growth in the second quarter and 1.5% Ringgit growth, the fourth consecutive quarter of upward movement.

(III). Chile

According to data released by Chile’s central bank on 18 August, GDP in the second quarter of the year rose by a whopping 18.1% year-on-year. Chile’s Finance Minister Cerda said that these figures were “to some extent closely related to the fact that the epidemic was somewhat under control and vaccination rates had increased”.

(IV). Peru

In addition, the Peruvian National Statistics Institute estimates that Peru’s GDP will grow by 10% this year.

Analysis suggests that economic growth in Latin American countries is mainly due to higher commodity prices in international markets and the recovery of the world’s major economies.

Multiple measures to address risks.

(I). Brazil

The main challenges to Brazil’s economic recovery are unemployment and high inflation. To address the risks, Brazil is actively raising vaccines and working to expand vaccination coverage, while providing coverage for low-income populations and the unemployed. The Brazilian government recently launched a new subsidy scheme to expand coverage for low-income people, which will benefit 17 million people. The government also added an additional R$18 billion to the budgeted expenditure of R$35 billion established and will spend R$49 billion on unemployment insurance this year.

(II). Chile

Promoting the recovery of the job market is also a goal of the Chilean government. According to official Chilean figures, the unemployment rate fell to 9.5% in June, down 2.7% year-on-year and for the first time below 10% since April 2020. The Chilean government has launched “the Chilean Progressive Recovery Plan”, which plans to invest US$34 billion and promote 130 investment projects between 2020 and 2022. Chile has already restored around one million jobs, according to Minister of Public Works Moreno. The Chilean government has launched more than 20 projects to encourage and promote job creation in the private sector within the framework of the plan, with a total investment of more than US$6 billion.

(III). Ecuador

Ecuador has introduced a tax reform to reduce production costs for businesses. Ecuador’s Ministry of Production, Foreign Trade, Investment and Fisheries said that the government will eliminate US$180 million in tariffs, benefiting more than 80 industries, over 6,000 businesses and 560,000 people across the country. This is the biggest tariff reform in Ecuador in more than 10 years, aiming to reduce the costs and expenses of raw materials and capital goods, which will activate the production of enterprises and promote the recovery of economic activities.

Analysis suggests that Latin American economies still face long-term risks. Latin America attracted significantly lower foreign direct investment last year. ECLAC expects investment growth in the region as a whole to be well below global levels this year. ECLAC said that Latin American countries need to actively address the long-term risks of a high external debt burden, sluggish investment, underemployment and environmental degradation, and the economic recovery process still faces deep-rooted problems such as inequality, poverty and a homogeneous economic structure.

China-Latin America trade highlights.

Data released by the General Administration of Customs of China shows that in the first half of this year, China’s total imports and exports with Latin America amounted to approximately US$203 billion, up 45.6% year-on-year. ECLAC believes that the Asian region, and China in particular, is the main driver of Latin American export growth in the future. Currently, Latin America is the second largest destination for Chinese outbound investment and an important partner for international production capacity cooperation. According to statistics from the Chinese Ministry of Commerce, from January to May this year, China’s direct investment in Latin America reached US$10.38 billion, up 40% year-on-year.

(I). Brazil

China has maintained its position as Brazil’s largest trading partner for 12 consecutive years. In the first half of this year, Brazil’s total exports increased by 35.8% year-on-year, and the foreign trade surplus rose by 68.2% year-on-year, making it the highest since the statistics were compiled in 1989, of which exports to China increased by 37.8% year-on-year in the first half of the year. According to data from the Chinese General Administration of Customs, total exports and imports between China and Brazil increased by 42.8% year-on-year in the first half of the year. Brazilian Foreign Minister França said that the development of relations with China is one of Brazil’s diplomatic priorities and that the Brazilian side hopes to further strengthen economic and trade relations with China.

(II). Chile

According to data from the General Administration of Customs of China, bilateral trade between China and Chile totaled RMB 1999 billion in the first half of this year, up 38.5% year-on-year. Chile’s foreign trade grew by 39.9% year-on-year in July, according to Chilean customs data. Chile’s exports to China accounted for 40% of the country’s total foreign exports that month, with exports to China exceeding US$3.3 billion. Ignacio, Director General of Chilean Customs, said that the rapid growth of bilateral trade between Chile and China in the face of the epidemic further confirms the importance of China as Chile’s main trading partner. China has achieved economic recovery and its strong demand has boosted Chile’s exports of minerals and other commodities, and the good performance of Chile’s foreign trade has laid an important foundation for the country’s economic recovery.

In recent years, Chinese and Latin American enterprises have been actively expanding cooperation in areas such as trade in services, and the trade structure between the two sides has continued to be optimised. At the recently held China-Brazil International Trade in Services Fair on clouds in some provinces and cities, the representatives of China and Brazil who attended the event believed that the current cooperation in services trade between China and Brazil is showing a deep, high-growth and diversified development trend. A special event for Latin American and Caribbean countries was held in the framework of the China International Trade in Services Fair 2021, where representatives from more than 10 countries, including Chile, Mexico and Brazil, introduced their trade exchanges with China and expressed their willingness to strengthen economic, trade and investment cooperation with China.

By Sherry Song Dhu