MercoPress. South Atlantic News Agency

Brighter future ahead for businesses in Latin America

Paraguay is the country expected to grow the most this year by the FGV

According to a study by the Fundação Getúlio Vargas (FGV) released Thursday, businesses in Latin America are up to their best level in two years after hitting unusual lows from the third quarter of 2022 through the second quarter of 2023.

The business climate in Latin America rose in the third quarter of 2023 to its best level in the last two years and the second best in almost six years, the economic research center FGV said.

The so-called Latin American economic climate index (ICE), which the FGV elaborated with surveys of 119 specialists from 15 countries, jumped more than thirty units, from 65.8 points in the second quarter to 99.6 points in the third quarter, its best level since the second quarter of 2021 (101.4 points) and the second best since the first quarter of 2018 (102 points).

According to the FGV, the sharp jump was caused by more encouraging assessments of Brazil and Mexico, the two largest economies in the region. While Brazil's index jumped from 58.8 points in the second quarter to 121.4 points in the third (the highest for the country in eleven years) Mexico's rose from 85.7 to 118.7 points.

“The downward trajectory in the inflation rate and the approval of the new fiscal framework and tax reform, as well as upward revisions to this year's GDP projections, are some of the factors behind Brazil's improved assessment,” according to the FGV, which highlighted a fall in inflation, the appreciation of the Mexican peso against the US dollar and the displacement of direct investment flows from the United States and China to the Latin American country as the main reasons for the new projections.

All the countries analyzed recorded an improvement in their business climate, except for Uruguay, which recorded a slight drop from 119.4 points to 114.9 points. Paraguay continues to have the best index in the region, with 172.7 points, followed by Brazil (121.4), Mexico (118.7), and Uruguay (114.9). Next came Peru (85.8 points), Chile (76.6), Colombia (61.4), Ecuador (49.9), Bolivia (47.7), and Argentina (30.3).

According to the study, the improvement of the indicators reflected the upward revision of the GDP growth projections for the countries of the region, except for Peru, Uruguay, Chile, and Argentina.

The forecast for economic growth in 2023 for Latin America as a whole was raised from 1.1% in the second quarter to 1.7% in the third quarter.

The country that will grow the most this year is Paraguay, with an expansion of 4.6%, followed by Bolivia (3.0%), Mexico (2.3%), Ecuador (2.2%), Brazil (2.2%), Peru (1.9%), Colombia (1.5%), and Uruguay (1.3%). The forecast for Chile is for a 0.5% contraction and Argentina a 1.3% decline.