Economic Developments - March 2018

Chile’s low ranking in the World Bank’s Index of Doing Business became controversial after the Bank’s chief economist, Paul Romer declared that the reports which determined the ranking for Chile may have been biased against the left-wing government of President Michele Bachelet. Chile ranked 34 under the administration of right wing President Sebastian Pinera (2010 to 2014), who has just been re-elected, but as low as 57 during Bachelet’s two terms in office, from 2006 to 2010, and from 2014 to March 2018. Economic policy has influenced the politics of Chile, the country with the highest development parameters in Latin America and a member of OECD.
China has started rewarding Panama for shifting recognition from Taiwan last year. Air China will commence flights from Beijing to Panama via Houston, a journey of 16.30 hours, from March 2018. Both countries will also negotiate a free trade agreement, announced during the visit in January of President Mr. Juan Carlos Varela to Beijing, after his meeting with President Xi Jinping. During the visit, both sides signed an agreement for China to finance a study to link Panama with neighbouring Costa Rica by train.
The UN Economic Commission for Latin America and the Caribbean (ECLAC) said in a report released early February that trade between China and Latin America surged 22-fold between 2000-2013. Trade totalled $266 billion in 2017. Under the 2015-2019 Cooperation Plan, the goal for 2025 is $500 billion in trade between LAC and China. China provided some $141 billion in financing to the region over the past decade, a figure that topped lending to Latin American nations by the Inter-American Development Bank (IADB) and the World Bank. Chinese investments amounted to $25 billion in 2017.
On 23 January negotiators from 11 countries reached an agreement on the Trans-Pacific Partnership (TPP) trade deal. Now called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, it comes a year after U.S. President Donald Trump withdrew the United States from the pact concluded by his predecessor. Chile, Peru and Mexico will be members of the CPTPP once it is ratified in March. The original TPP would have covered about 40 percent of the world’s GDP. The CPTPP’s coverage is only around 13.5 without the United States, but it will create new opportunities, opening markets with a combined population of 494 million people and providing preferential access into Japan, the world’s third-largest economy.
According to the Inter American Dialogue, a think tank based in Washington DC, remittances to LAC reached $75 billion in 2017, an 8% increase from 2016. Remittances from expatriate communities are vital to LAC, especially Central American countries like El Salvador, with almost 3 million expatriates. 2 million Haitians abroad - in the US, Chile and Brazil – sent remittances accounting for 36 percent of Haiti’s GDP.
Venezuela’s oil minister and head of state oil firm PDVSA, Mr. Manuel Quevedo stated that oil production increased to nearly 1.9 million barrels per day (mbpd) after hitting a historic low of 1.834 mbpd in November 2017. At its peak early this century Venezuela was producing over 3 mbpd. Venezuela’s bolivar crossed 200,000 to the dollar on the black market in January. The official rate of 10 to the dollar, under the DIPRO system was given up. The DICOM system places the Bolivar around 3500 to the dollar. President Maduro announced in January the pre-sale of the crypto-currency Petro backed by Venezuela’s oil reserves. The initial reference price will be $60 per Petro and the government contemplates a sale of 100 million Petros to institutional and individual investors to get $6 billion.
Argentina’s President Mr. Mauricio Macri on a state visit to Russia signed economic agreements, notably one which would allow Russia to mine uranium, and Russia’s Rosatom to set up a nuclear power plant in Argentina. Argentina has the largest Russian-origin community in LAC – around 400,000. The Russian navy is helping trace a missing Argentine submarine.



March 6, 2018

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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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