Economic Developments - January 2019

The G20 summit (30 Nov-1 Dec) was a bittersweet milestone for Latin America and host President Mauricio Macri of Argentina. Instead of the prestige associated with the event, there was an atmosphere of discord and skepticism. Consensus was barely achieved on the final day, with the US still standing apart. Of the three LAC countries members, Mexico’s attendance by outgoing President Enrique Pena Nieto – who signed the revived NAFTA treaty with President Trump and PM Trudeau on his last day in office - was overshadowed on the second day of the summit by the swearing in of his successor Lopez Obrador, who has condemned the corruption under his predecessor. Brazil’s President, Michel Temer, exiting the presidency a month later with abysmal ratings and under a cloud, will hand over to an unpredictable President-elect Jair Bolsonaro, whose attitude towards South-South cooperation is suspect. 

President Macri held a bilateral meeting with President Trump to discuss Argentina’s precarious economic situation, apart from Venezuela, the war on drugs, etc. The US sees Macri as an ally in a left-leaning LAC, with US-friendly regimes facing allegations of mismanagement and corruptio, and popular movements in favour of radical change, apart from migratory pressures pushing northwards. Macri’s meeting with Teresa May – the first British PM visit since the 1982 Falklands war – was a “frank dialogue in a positive ambience” though the British made clear that the sovereignty of the Falkland islands is not negotiable. 

Media reports indicated that a joint venture refinery project between state companies CNPC of China and Venezuela’s PdVSA will take off. The investment of over $ 9 billion will be shared 60:40 by China and Venezuela and the refinery is expected to be erected in China’s Guangdong province by 2021. The 400,000 barrels per day refinery will absorb ever more of Venezuela’s dwindling oil production and provide China with yet another hold on the former’s resources. Reports indicate that Venezuela, with the largest oil reserves in the world, is importing 300,000 bpd to fulfill its export commitments. Venezuela, which assumes presidency of the Organisation of Petroleum Exporting Countries (OPEC) in 2019, has reportedly been exempted from the recent cuts announced by OPEC of three percent, along with Iran and Libya at the 175th meeting in Vienna in December.

The UN Economic Commission for LAC (ECLAC) in its year-end report released on 27 December said the LAC economy would expand by just 1.2 percent in 2018, and 1.7 percent in 2019. “During 2018, emerging markets, including Latin America, showed a significant reduction in external financing flows, while at the same time sovereign risk levels increased and their currencies depreciated against the dollar.” The worst performers were Venezuela, whose gross domestic product (GDP) declined by 15 percent, Dominica (-4.4 percent), Nicaragua (-4.1 percent) and Argentina (-2.6 percent). Venezuela, which has been racked by a severe economic crisis for years, is forecast to contract by a region-worst 10 percent next year, while Nicaragua (-2 percent) and Argentina (-1.8 percent) also are expected to remain in recession.


January 11, 2019

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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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