Daily Intelligence Briefing: Latin America
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Daily Intelligence Briefing – April 13, 2015
Today’s Issue Cluster: Latin America
As the democratic transition matures, more governments are adopting anti-corruption reforms
Roughly 2/3 still rank below the median on TI’s corruption perceptions index … a fifth of Mexico’s businesses say corruption is their main obstacle
The Pacific Alliance is removing tariffs and opening up trade for 35% of Latin America’s GDP, in contrast to the statist Mercosur
Cuba’s potential exports to the US include nickel and biotech, if Congress lifts the embargo,
Brazil’s corruption scandal has expanded to another ministry and a big bank … Rouseff’s approval ratings hit a new low and nearly 2/3 want her impeached
Brazil’s GDP is running the slowest in 20 years and inflation is set to exceed the official target for the first time in 12 years
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Bonds – German 10-year yields heading below zero
Yields on Bunds dropped to just 0.16 per cent on Friday, compared with 0.54 per cent at the start of the year, and as the ECB enters its second month of quantitative easing…. Switzerland a much smaller market that is not part of the eurozone last week became the first government in history to sell benchmark 10-year debt at negative interest rates… Negative yields in Germany would have much greater symbolic importance for the ECB
Bonds – Asia’s Junk Market Heats Up
The return of confidence to this risky corner of Asia’s markets has come after Beijing threw a lifeline to Chinese developers by relaxing mortgage policies for home buyers. The builders are the biggest issuers of this type of debt in the region ….. A selloff in Januarysparked by Shenzhen-based developer Kaisa Group Holdings Ltd. ‘s struggles that led to a missed interest payment for its offshore bondsbrought fundraising in the market practically to a halt, but some developers recently found other avenues to raise cash.
World – Recovery at risk of stalling
The global economy is mired in a “stop and go” recovery “at risk of stalling again”, according to the latest Brookings Institution-Financial Times tracking index…. The Tiger index Tracking Indices for the Global Economic Recovery shows how measures of real activity, financial markets and investor confidence compare with their historical averages in the global economy and within each country. “Barring three economies with sustained growth momentum the US, UK, and India there are few others where short-term growth prospects look encouraging,”
LatAm – ‘Despite scandal, the region is making progress’
Resistance to corruption in Latin America has a long and largely futile history. …. Yet in today’s scandals, and the indignation they have aroused, lie hopeful signs. The unrelenting pursuit of executives and politicians responsible for the Petrobras scandal (the petrolão) shows that Brazil’s judicial institutions are functioning as they should. In Mexico Congress is pushing through anti-corruption reforms. There are promising experiments in Central America. Latin America’s young democracies may be starting to get to grips with one of their worst and most enduring problems….
Though Latin America is a middle-income region, two-thirds of its countries come in the bottom half of Transparency International’s “corruption perceptions index”. … In 2010 FIESP, the industry federation of São Paulo state, estimated that corruption cost 1.4-2.3% of GDP every year. In Peru stolen public money adds up to 2% of GDP, says Ana Jara, the prime minister. Almost a fifth of businessmen think corruption is the main obstacle to doing business in Mexico, says the World Economic Forum. E
LatAm – ‘The Pacific Alliance in search of a shared product’
Chile, Colombia, Mexico and Peru …. signed an agreement in 2013 to abolish tariffs on 92% of merchandise trade, with the remainder to be freed by 2020. They have scrapped tourist visa requirements for each others’ citizens, and have opened some shared embassies abroad. The stockmarkets of Chile, Colombia and Peru agreed to join up in a regional bourse called MILA, which Mexico’s exchange joined in January…..
member governments share a commitment to free markets, free trade and democracy. That distinguishes them from more state-led, protectionist and in some cases authoritarian governments of the Mercosur trade group, which includes Argentina, Brazil and Venezuela. … It comprises 200m people, 35% of Latin America’s GDP and half its exports. It is a second Brazil, its boosters have often pointed out…. The reality of the Pacific Alliance is that its members, separated by vast distances and poor communications, have few economic links. E
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Daily Intelligence Briefing: Latin America
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