Economic climate improves in the largest Latin American economies
The Ifo/FGV Indicator of the Economic Climate (ICE) of Latin America – developed in partnership between the German Institute Ifo and FGV – improved between July and October, although it still shows an unfavorable climate with a negative balance of 10.7 points. The improvement was driven by the Expectations Indicator (IE), which went from zero to a positive balance of 21.6 points. The Current Situation Index (ISA) also recorded a slight improvement of 1.7 points and remains negative, with a balance of 38.3 points.
The behavior of the economic climate of Latin America did not match that of the world, which worsened, dropping from a positive to a negative balance (-2.2 points). It is interesting to note that the ICE of Latin America has been negative since July 2013, except for January 2018. On the other hand, the ICE of the world was positive in the same period, except between October 2015 and October 2016, and now in the October Survey. The difference between Latin American and Global ICE results indicates that domestic factors in Latin America increased their weight in determining the economic climate of the region.
The worsening of the global ICE was not uniform among the largest economies in the world. While the ICE fell 10.2 points between July and October in the European Union, it rose 8.2 points in the United States and 11.5 points in Japan. All previously mentioned economies recorded a favorable economic climate. All BRICS nations recorded an unfavorable economic climate, except India. Brazil had the lowest negative balance (-33.8), followed by South Africa (-27.0). In October, the economic climate only improved in Brazil and South Africa.
ICE results divide the selected Latin American countries into two groups: The first consists of the largest economies in the region – Brazil, Mexico, Argentina, Colombia, Chile and Peru; all recorded improvements in the economic climate, except Colombia. In addition, the three largest economies (Brazil, Mexico and Argentina) show an unfavorable economic climate, as opposed to the other three. Chile had the highest ICE in October (44.4 points).
The complete study is available on the website.