Economic Developments - May 2017

Mexico has taken on the Trump challenge by accelerating talks with signatories of the TPP, Brazil and Argentina who were invited to the March meeting of the 4-nation Pacific Alliance, followed by a meeting between the two blocs in April in Buenos Aires. This market-friendly grouping, formed in 2012 by Mexico with Chile, Peru and Colombia, has drawn attention for its success in lowering trade and investment barriers. US threats have already impacted the Mexican peso, FDI and may hit GDP growth (2.3 percent in 2016). A major benefactor could be China, which has already eaten into US market share, enjoys a considerable trade surplus with Mexico, has set up automobile plants and scored some important projects in Mexico. Meanwhile on 26 April, President Trump reportedly told his Mexican and Canadian counterparts he would not immediately terminate NAFTA but instead bring it ‘up-to-date through renegotiation…’
China’s focus on LAC continues despite the global slowdown. China’s Development Bank and Export Import Bank have lent US$ 141 billion since 2005. Loans principally to  Brazil, Venezuela and Ecuador in 2016 totaled US$ 21.2 billion, after the record $ 37 billion in 2010. Ongoing projects include the El Mutún iron ore mines (which India’s Jindal Steel exited in 2012), with a loan of $ 1.5 billion; a $ 327 million railway project in Jamaica; hydel plants in Argentina, etc. China’s funding, though higher than the World Bank and IADB combined, comes at relatively high rates of interest, is invariably tied to Chinese procurement, and often involves import of Chinese labour, which in some cases has resulted in amplifying the Chinese diaspora. In the case of Venezuela these funds have been used for budgetary purposes, a practise winked at by China to consolidate its political hold there.
The United Nations Development Program (UNDP) released  the 2016 Human Development Report ranking countries on a Human Development Index (HDI), that measures advances in life expectancy, literacy and the quality of life of the population. Venezuela stands out with a score of 0.767 over Brazil (0.754), Peru (0.740) and Colombia (0.727). The UNDP warns in its report that despite the general progress recorded in the Human Development Index during the last 25 years, extreme poverty and exclusion persist in Latin America, mainly due to unequal distribution of income. India’s value has increased by 46 per cent (from 0.428 to 0.624) between 1990 and 2015, well below Latin American countries, and it ranks 131 out of 188.
May 11, 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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