HABERLER & YAYINLAR
14.09.2017
EKONOMİ YAYINLARI

Time to address the infrastructure gap in Latin America

Time to address the infrastructure gap  in Latin America

During the commodity super-cycle that lasted over a decade, until around 2014, Latin American economies showed robust performance.

Growth was possible even in the context of generally weak infrastructure. Higher revenues from the exports of primary goods led to the expansion of public and private domestic consumption. Activity throughout these years was driven by the flourish of an emerging middle class and by populist governments that disregarded the cyclical feature of commodities. The setback in international prices, which became more apparent as from mid-2014, had strong repercussions on growth and exposed vulnerabilities in the region. The ensuing weaker terms of trade caused the depreciation of Latin America’s floating currencies against the USD. This depreciation was not enough to boost the competitiveness of manufacturing goods and instead led to the deterioration of trade balances. This, in turn, prompted large twin deficits in the region’s current and public accounts. Following two years of negative growth, regional activity is expected to emerge from recession in 2017. Nevertheless, Coface forecasts a somewhat lackluster performance, of just 1.2%.

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Verda YAKAR

TEL: +90 (216) 251 99 10
verda.yakar@coface.com 

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