Where have all the Spaniards gone? – BBC News 10-03-14

Salient to Investors:

  • Fundacion Alternativas said 700,000 Spaniards left Spain between 2008 and 2012. The National Statistics Institute reports 547,890 left in 2013, 79,306 of them Spanish nationals born in Spain.
  • Spaniards are fleeing 25% unemployment and flocking to Latin America, including Brazil, where language barriers are few, the cost of living is lower, and the opportunity to climb the corporate ladder are plenty. 5,739 Spaniards moved to just Chile in 2013, versus 3,700 to the whole of Latin America in 2005 .
  • Spaniards are prized for their European education and background. Spaniards are surprised by the modernity, opportunity and comforts of home in countries like Peru, Chile and Brazil.
  • The IMF predicts Spain to grow 1.2% in 2014, Peru 5.5% , Mexico 3%, Chile 3.6%  and Panama 7.2%.

Read the full article at http://www.bbc.com/capital/story/20141003-why-are-spaniards-fleeing-home

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Markets punish South America’s Bad and Ugly economies – BBC News 02-02-14

Salient to Investors:

Investors are abandoning emerging economies, good and bad, for the US.

Morgan Stanley said Brazil, Indonesia, India, South Africa and Turkey are the Fragile Five – all with large deficits, slowing growth and vulnerable currencies.

Argentina is generally credited with starting the general panic after playing fast and loose with its deficit and letting inflation take hold: government attempts to control the economy on a micro-level have been a failure. The Index of Economic Freedom says state interference has grown substantially since 2003, accelerating the erosion of economic freedom, while the judicial system has become more vulnerable to political interference, and corruption is prevalent.

Venezuela and Argentina have been economically mismanaged and are suffering as the great Chinese commodity cycle takes a downward path.

Brazil is unattractive. Elizabeth Johnson cites a fair amount of government intervention, and inflation is very high at 6%, though the Brazil Central Bank has taken tough action and put up interest rates. Johnson said fiscal adjustment is going to be difficult in an election year. However, Johnson said Brazil’s exports are too big to ignore, particularly agriculture, even with the commodity cycle on a downswing.

Brazil is the world’s biggest exporter of sugar, coffee, and beef and close to being the biggest in soya, chicken and corn – with this dominance a fall in the currency is only good news for exporters.

Brazil’s fall this year has been just 2% and appears manageable. Johnson says strategic foreign investors have not been disturbed by the last week’s panic as foreign direct investment has held up reasonably well, while investors in oil and gas, the agricultural sector, in tractor and car manufacturing, and wind power show no sign of concern.

Peter West at Poalim Asset Mgmt lists Mexico, Peru, Colombia and Chile as “good” emerging economies. he puts Mexico at the top of the list because it has been implementing reforms and because of NAFTA,  80% of its exports go to the US and will share in the recovery there.

Peru, Colombia and Chile have all benefitted from the commodity boom and are now being equally punished by the collapse – particularly in the copper price. West says they have done their homework, with inflation under control and some degree of fiscal discipline, and will separate from the Fragile Five, when the dust settles.

Read the full article at http://www.bbc.co.uk/news/25988823?print=true

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Latin America Disappoints After Squandering Commodity Boom – Bloomberg 05-29-13

Salient to Investors:

Latin America is disappointing investors, economists and businesses with slower-than-forecast growth as waning commodity prices and strong currencies hit nations that failed to diversify and become more competitive.

Economists cut Brazil’s 2013 outlook for the second time in 7 days, forecasting the worst 3-year period in a decade.

The region has invested too little of windfall revenue in roads, technology and education, and to promote businesses outside of mining and agriculture. Chile has the region’s best OECD reading-skills results but is ranked 44 among 65 countries, with Peru second-to-last.

Brazil, Mexico, Colombia, Chile and Peru increased primary exports to an average 71.3 percent of foreign sales from 58.3 percent in the decade through 2011, instead of reducing vulnerabilities to commodity boom-and-bust cycles. SA Commodities said 212 vessels awaited cargo in Brazil during March, and the line of trucks to unload soybeans at its busiest port surged to a record 15 miles long.

Alberto Ramos at Goldman Sachs said the easy growth has been collected, and they need to find domestic sources of growth, rather than relying on abundant external liquidity and high commodity prices.

James Gaul at Boston Advisors is more cautious on the region than several years ago, driven by this decline in the global, commodity-led growth theme.

Analysts predict the region will grow 3.38 percent in 2013 versus predicting 3.81 percent 6 months ago, and Asia to accelerate to 6.44 percent.

Alonso Cervera at Credit Suisse said Mexican results in general have disappointed, and Q1 confirmed that Mexico is still dependent on a healthy rest of the world.

The IMF said Latin America will not sustain growth at current levels, given labor constraints and recent trends for capital and productivity increases, and potential growth through 2017 is closer to 3.25 percent versus 4 percent average a year in the decade through 2012.

The World Bank said Brazilian companies spend 2,600 hours a year dealing with tax issues compared with 209 hours in the East Asia and Pacific region.

Henry Stipp at Threadneedle Asset Mgmt said lower commodity prices may help cut inflationary pressure and give central banks more room for monetary stimulus.

Economists have cut Columbia’s 2013 growth forecast to 4.2 percent versus 4.9 percent last August.

Michael Shaoul at Marketfield Asset Mgmt said Latin America has not yet bottomed and will not recover to the growth level of the previous decade because the commodity boom is over and policy makers failed to reduce their dependence on primary goods when money flowed into their economies.

Read the full article at http://www.bloomberg.com/news/2013-05-29/latin-america-disappoints-after-squandering-commodity-boom-era.html

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