Economic Developments - September 2017

Foreign Direct Investment (FDI) inflows to LAC declined by 7.9 percent to $167.043 billion in 2016, due to low commodity prices, sluggish economic growth and global trend of shifting investment in developed economies, according to the UN Economic Commission for Latin America and the Caribbean (ECLAC). At 3.6 per cent of the region's gross domestic product (GDP), against the global average is 2.5 per cent, investment by transnational corporations in the region's economies is crucial. Brazil got the lion’s share: 47 per cent, a 5.7 percent increase; while Mexico at second place, fell by 7.9 percent.

The IMF in its quarterly update on Latin America & Caribbean forecast a gradual upturn for Latin America’s economy in 2017 and 2018, based largely on Argentina’s and Brazil’s recoveries from their recessions. It postulates 1 per cent in 2017 (UN ECLAC estimates 1.1 per cent) and 1.9 per cent in 2018, which is still weak but more optimistic than a year earlier. The recovery will rely upon economic reforms and better governance –(for example: fight against corruption, anti-cyclical macro-economic measures, vigilant institutions, reasonable levels of foreign direct investment, a shunning of populism) - absent any major upturn in commodity prices. Greater regional integration has also helped.

US oil major Exxon announced in late July another significant find in offshore Guyana. The Payara field, which could pump 120,000 bpd by 2020, raises Guyana’s estimated recoverable resources to about 2.25-2.75 billion barrels. On the South American Caribbean coast, with an Indian-origin diaspora up to 45 percent of its 700,000 population, Guyana neighbours Venezuela but has rejected the latter’s claims in these waters.

 

 

September 12, 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 (www.latindia.in)

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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