BY CHRONICLE STAFF
BRAZIL: STRONG OUTLOOK
Brazil’s economy, Latin America’s largest, should grow by 5.5 percent this year, Bulltick capital markets estimates.
“Brazil is going to grow strongly in 2010,” Alberto J. Bernal-León, head of research at Bulltick Capital Markets, told the Latin America 2010 conference organized by the University of Miami’s Center for Hemispheric Policy last week. “It will have a very good year.”
The presidential elections scheduled for October won’t have any significant impact on the outlook, he emphasized. “From a market standpoint, I could not care less who is the next president of Brazil,” he said. “It would take a complete maniac to change direction.”
President Luiz Inacio Lula da Silva, who assumed office seven years ago, can’t be re-elected. His candidate, Dilma Rouseff, trails Sao Paulo Governor Jose Serra from the center-right PSDB party, but the gap between them is narrowing. According to a poll from Instituto Sensus last month, Serra has the support of 33.2 percent likely votes, while Rouseff can count on 27.8 percent. That compares with Serra’s 20 percent lead in September last year.
Bernal did acknowledge, though, that Serra likely will implement more reforms aimed at reducing Brazil’s bureaucracy.
CENTRAL AMERICAN OUTLOOK
Central America has chosen two new leaders recently, both seen as business-friendly. In Costa Rica, Laura Chinchilla was elected president on Sunday and vowed to make closer relations with China and reduced crime her top priorities after she assumes office in May. In Honduras, Porfirio Lobo assumed office in January, pledging to work to end the political crisis that affected the country last year.
Mexico remains the lowest cost countries for manufacturing outsourcing, according to a new survey by AlixPartners. Mexico benefited from a favorable exchange rate swing, while China was negatively affected by exchange swing and a dramatic increase in transportation costs. India came in second, due to very competitive wages, while Brazil ended up in 11th place, behind Singapore and ahead of the Czech Republic. That means that when it comes to manufacturing costs, Mexico beats all the BRIC countries and even low-cost countries like Vietnam. In contrast, Brazil is actually more expensive than the United States, in part because of its exchange rate and in part because of high overhead costs.
ECONOMIC FREEDOM: COLOMBIA, PERU GAIN
Chile’s economy remains the freest in Latin America, but Colombia and Peru are quickly closing the gap, according to the 2010 Index of Economic Freedom from the Heritage Foundation.
Whereas Chile’s score fell 1.1 points to 77.2, Colombia gained 3.2 points to 65.5 and Peru 3 points to 67.6. That was the best improvement among 20 countries in Latin America, according to a Latin Business Chronicle analysis of Heritage data. Peru’s economy is now Latin America’s fifth-freest. Mexico also did well, boosting its score 2.5 to 68.3 points, leading it to become the fourth-freest economy in the region. El Salvador and Uruguay kept their rankings as the second- and third-freest economies.
The countries that saw the worst performance? Bolivia (down 4.2 points), Ecuador (down 3.2 points), Venezuela (down 2.8 points) and Nicaragua (down 1.5 points). By coincidence all belong to ALBA, the political-economic group led by Venezuelan strongman Hugo Chavez. Cuba remains the most repressed economy in Latin America, with Venezuela right behind it as the second-worst country in terms of economic freedom.
Leading auto executives from Germany were on hand when the Inter-American Federation of Auto Journalists (FIPA) recently awarded their annual awards for the SUV and Inter-American Auto to the Audi Q5 and to the Porsche Panamera. "We are extremely happy with the FIPA award for our extraordinary Q5,” said Juergen Deforth, VP of Audi Latin America. ”We thank FIPA and all of the journalists who made this possible." Matthias Brück, President and Managing Director of Porsche Latin America, accepted on behalf of his company.
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