Economic Developments - January 2017

Peru hosted the 24th Summit of the 21-nation Asia Pacific Economic Cooperation (APEC) on 19-20 November. Attended by U.S. President Barack Obama, Russia’s Vladimir Putin, China’s Xi Jinping and Japan’s Shinzo Abe, the Summit agreed “to carefully study the possibility for an Asia-Pacific Free Trade Area”, an idea promoted by China and linked to the ongoing negotiations for an Asian RCEP. Even as the leaders sought to allay fears about the future of the Trans-Pacific Partnership (TPP), President-elect Donald Trump announced he would take the US out of the pact. The 12-nation TPP (all APEC members), a high standards economic and commercial agreement finalised in February 2016, must be ratified by the US to  come into force.
India seeks membership of APEC, which counts Mexico, Peru and Chile among its members, though inclusion of new members is still under a moratorium. This forum will influence the evolving international economic and commercial architecture, with challenges posed by protectionist sentiments in the US, in contrast to the prevailing mood for freer trade in LAC itself.
XI Jinping made his third visit as President to LAC, visiting Ecuador and Chile as well. On 24 November China published its second Policy Paper on LAC. The first was published in 2008. The paper outlines ‘five salient features… sincerity and mutual trust in the political field, win-win cooperation on the economic front, mutual learning in culture, close coordination in international affairs, as well as mutual reinforcement between China's cooperation with the region as a whole and its bilateral relations with individual countries in the region.’ Though China’s trade with LAC fell in 2015 to around $230 billion, with fall in commodity prices, its economic engagement is thriving. Even new right-wing regimes in Brazil, Argentina and Peru have reaffirmed their interest in Chinese business and investment.
On 5 December Mexico concluded a successful bidding round for 9 large deepwater oilfields. President Peña Nieto’s comprehensive reform, in December 2013, inter alia eliminated the 76-year monopoly of the state owned PEMEX, whose peak production of 3.4 million barrels per day (bpd) has fallen to around 2 million bpd currently. The current round could yield $41 billion in investments and ramp up production significantly. Mexico has among the largest shale reserves in the western hemisphere but limited experience in the regulatory sphere. India’s ONGC (Videsh) Ltd has an office in Mexico and was pre-qualified in June 2015, but was unsuccessful in the first round. In 2015-16, of $2.3 billion of India’s import from Mexico, $1.4 billion was crude oil.
On 15 December Venezuela announced that it would replace 100 bolivar (highest denomination) currency notes with new denominations of 20,000, 10,000, 5,000, 2,000, 1,000 and 500 bolivars, and 100-, 50- and 10-bolivar coins. The largest denomination of 20,000 Bolivars, officially around $35, is worth under $5. Hyper-inflation and currency hoarding in neighbouring Colombia were given as the main reasons for the move. On 17 December, after widespread riots over unavailability of cash, President Maduro claiming the scheme was being sabotaged and postponed the changeover.
January 5, 2017


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About the Author

Ambassador Deepak Bhojwani

Former Ambassador of India to Colombia, Venezuela and Cuba and Distinguished Fellow, Ananta Centre

Ambassador Deepak Bhojwani joined the Indian Foreign Service (IFS) in 1978. He retired in February 2012. During his career, he was accredited as Ambassador in seven Latin American countries, resident in Colombia, Venezuela and Cuba, concurrent in Ecuador, Costa Rica, Cuba and the Dominican Republic, and was Consul General in Sao Paulo. He served abroad in three Continents – Asia (Indonesia and Malaysia), Europe (Spain and Czech Republic) and Latin America.

In the Ministry of External Affairs, he served in the Divisions dealing with Administration; West Asia and North Africa; US and Canada; and had a brief stint at the United Nations.

Ambassador Bhojwani also served as Private Secretary to the Prime Minister of India, Mr P.V.Narasimha Rao for two years from 1994 to 1996, and as Special Assistant to the Minister of State for External Affairs and for Science and Technology, Mr K.R.Narayanan, from 1985 till 1988.

He writes extensively on Latin America and its relations with India. He has written a book published in 2015 titled ‘Latin America, the Caribbean and India: Promise and Challenge’.

He is currently a Consultant for Latin America and the Caribbean through his firm LATINDIA (

Ambassador Bhojwani also serves as Independent Director on the Board of Bharat Petroleum Corporation Ltd., one of the largest state oil and gas companies of India.

Since January 2017 he has been Country Manager and Director, Magotteaux Industries Pvt. Ltd.

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