Economia global

SAHIC 2011
Santiago, Chile - September 2011

Global Shocks &
Economic Outlook
Latin America in Context

Pablo F.G. Bréard
Vice-President & Head of International Research

Global Economic Research

Global Economic Outlook ► The IMF View

“The global economy is in a dangerous new
phase. Global activity has weakened and
become more uneven, confidence has fallen
sharply recently, and downside risks are
growing”

World Economic Outlook Report, September 20, 2011


The Shifting Global Landscape

• Global Economic Rebalancing / Softness
• Europe/US/Japan Debt (Un)Sustainability
• Fiscal Consolidation & (De)Leveraging
• Erratic Governance / Intervention INXS
• Financial Market Volatility / Contagion
• (Dis)Orderly Currency Adjustments
• Credit Risk (Re)pricing / Ratings Shifts


Global Economic
Rebalancing


Global Economic Rebalancing ► The New G10
GDP size (US$ billion) in PPP terms 2011-12 (e)
19.3%
15,000
13,500 Americas
14.6%
12,000 Europe
10,500 Asia
9,000
7,500
6,000
5.6% 5.8%
4,500
3.9%
2.8% 2.9% 3%
3,000 2.3% 2.8%
1,500
UK

USA
India
Italy

Russia

Germany

China
France

Brazil

Japan
Source: IMF World Economic Outlook (April 2011)


Neo G10 ► Growth, Inflation & Debt Dynamics

Consumer Price Inflation % Change (2011-12e)
10 9.4
Global Growth > Emerging Market Strength Global Inflation > Emerging Markets under Pressure 8.0
8.4 8
6.8
Real GDP % Change (2011-12e)

8
Developed 6.0
6 Developed
6 4.8
Developing
(BRIC) 4.7 Developing
4 (BRIC)
3.8 3.3
4
2.2 2.4 2.4
2.6 2.0
1.9 2.2 2
2 1.4 1.5 1.1
0.9 0.9

0
0

Germany

USA

Italy
Japan

UK

China

Brazil

India

Russia
France
Italy

Germany

Brazil

India
Spain

France

Russia

China
USA
Japan
UK
General Government Borrowing Needs % GDP (2011-12e)

0 240 231

Public Sector Gross Debt % GDP (2011-12e)
Fiscal Outlook > Deep Adjustments under Way Debt Sustainability > Credit Risk Repricing
220
(1.3) 200
(2)
(1.9) (1.6) 180
(2.5) Developed
160
(4) 140
(3.9) Developing 120
120 (BRIC) 101
(6) 100 85 89
(5.5) 80
(5.9) 80 65 66 68
Developed
60
(8)
(7.8) (7.7) Developing 40
17
(BRIC) 20 9
(10) (9.2) (9.2)
0
USA

Italy
India

France

Russia

China
Japan

UK

Spain

Brazil

Germany

Germany

USA

Italy
Spain

Japan
UK
China

Brazil

India
Russia

France

Foreign Capital Flows ► Emerging Markets in Fashion

1300
Source: Institute of International Finance - June 2011
1200
1100
500
1000 Foreign Direct Investment
900 Portfolio Investment
371 423 435
Multilaterals
800 Bank Lending
US$ billion

700 Bond Issuance
600
357
500 171 508
400 201

300 154
200 102
138 143
100 118
0
-100
2000

2001

2002

2003

2004

2005

2006

2007

2008
2009

2010

2011f

2012f

Global Stocks ► Emerging Market OutPerformance

Global Equity 5Y % Return USD % Return since March 2009

25% WORLD 67
20%
15% North America 68
10% Europe
5%
European Union 71 Asia
0%
-5% Americas
-10%
-15%
-20% Developing Asia 104
-25%
-30% BRIC 109
-35%
-40% Developing
Americas 120
-45%
-50% Developing
135
Sep-06
Dec-06
Mar-07
Jun-07
Sep-07
Dec-07
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11

Europe

0 20 40 60 80 100 120
USD-adjusted Total Return (%)


LATAM Equities ► Favourable Trend / Correction?

Country Index Return (5-yr) % L/C Return since March 2009

Peru IGBVL 195%
125%
Argentina MERVAL 186%
100%

75% Venezuela IBVC 168%

50%
Mexico IPC 107%
25%
Colombia IGBC 80%
0%
Peru IGBVL
Mexico IPC
-25% Colombia IGBC Chile IPSA 71%
Chile IPSA
Brazil BOVESPA
-50%
Brazil BOVESPA 55%
Sep-06

May-07

May-08

May-09

May-10

May-11
Jan-07

Sep-07
Jan-08

Sep-08
Jan-09

Sep-09
Jan-10

Sep-10
Jan-11

0% 40% 80% 120% 160% 200%


Global Recovery
Dynamics


Global Growth ► Gradual, Soft & Uneven Recovery

Economic Zone 1999-08 2009 2010e 2011f 2012f
North America 2.6 (2.9) 3.2 1.9 2.2
2.4 (2.6) 3.0 1.7 2.1
Euro Zone 1.9 (4.2) 1.7 1.6 1.2
Japan 1.4 (5.2) 4.0 0.3 3.0
Developing Asia 7.7 5.6 9.4 7.8 8.0
10.1 9.1 10.4 9.3 9.5
Developing Europe 5.3 (5.2) 4.6 4.5 3.9
Latin America (ex Mex) 3.3 (0.1) 6.2 4.0 4.1
3.1 (0.2) 7.5 3.6 4.0


Americas ► North-South Growth Divergence

5.9
6.0 5.6
10-year average
Real GDP (annual % growth rate)

5.5
5.0
5.0 4.6
2011 - 12 (e)
4.5
4.0 3.8
3.6 3.6
3.5
3.0
2.5 2.2
1.9
2.0
1.5
1.0
0.5
0.0
Mexico

Argentina
USA

Canada

Chile
Venezuela

Peru
Brazil

Colombia

US Growth View ► Modest & Uneven Recovery

4 4
3.5 3.5
3 3
2.5 2.5
Real GDP % change (%)

2 2.2 2
1.8 1.7
1.5 1.5
1 1
0.5 0.5
0 0
-0.5 -0.5
-1 -1
-1.5 Year/Year -1.5
-2 Year/Year (annualized) -2
-2.5 Quarter/Quarter (annualized) -2.5
-3 -3
Q1 11
Q2 11
Q3 11
Q4 11

Q1 12
Q2 12
Q3 12
Q4 12
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010


Global Monetary Outlook ► Ongoing Monetary Stimulus
1.25 2.5
Fed Funds UK repo rate
2.25
Fut Mar 2012 Fut Mar 2012
1 2 Fut Jun 2012
Fut Jun 2012
1.75
0.75
1.5
1.25
0.5
1

0.25 0.75
0.5

0 0.25

Aug-11
Apr-11

May-11
Aug-11

Jun-11
Apr-11

Jan-11

Jul-11
Oct-10

Mar-11
Sep-10

Feb-11
Nov-10
May-11

Dec-10
Jun-11
Jan-11

Jul-11
Oct-10

Mar-11
Sep-10

Feb-11
Nov-10

Dec-10

2.5 2.5
Euribor
2.25 2.25
Fut Mar 2012
2 2 Fut Jun 2012

1.75 1.75

1.5 Canada O/N 1.5
Fut Mar 2012
1.25 Fut Jun 2012 1.25

1 1

0.75 0.75

0.5 0.5

Aug-11
Apr-11

May-11
Aug-11
Apr-11

Jun-11
Jan-11

Jul-11
Oct-10

Mar-11
May-11

Sep-10

Feb-11
Nov-10

Dec-10
Jun-11
Jan-11

Jul-11
Oct-10

Mar-11
Sep-10

Feb-11
Nov-10

Dec-10

Americas ► Regional Inflation Convergence ?

30
27.0
Consumer Price Inflation (y/y rate %)

10-year average
25
2011 - 12 (e)
20.0
20

15

10
6.0
5 3.7 3.1 3.3 3.5
2.3 2.4

0
Mexico

Argentina
USA
Canada

Chile

Venezuela
Peru

Brazil
Colombia


LATAM Interest Rates ► Gradual Easing in Sight?
14 US
Brazil
Mexico
12 Chile 12.00
Peru
Colombia
10
Annual % Change

8

6
5.25
4.25
4

2

0
Dec-07

Dec-08

Dec-09

Dec-10
Sep-07

Jun-08

Sep-08

Jun-09

Sep-09

Jun-10

Sep-10

Jun-11
Mar-08

Mar-09

Mar-10

Mar-11

Global Currency
Adjustments


Global FX Volatility ► USD weakness in Focus

EUR vs. USD (2005-2010) USD % loss since 06 Jun 2010

1.60 1.59 CHF 32
1.56
AUD 24
1.52

1.48 JPY
1.44
EUR
1.40
1.37 GBP
1.36

1.31
CAD 7.3
1.27

1.23
CNY
Americas
1.19 1.20 BRL
Asia/Oceania
Sep-06
Dec-06
Mar-07
Jun-07
Sep-07
Dec-07
Mar-08
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11

RUB Europe/Africa

0 5 10 15 20 25 30 35

Bilateral Deficit by Major Partner US $ billion

-600
-500
-400
-300
-200
-100
0

Aug-02
Dec-02
Apr-03
Aug-03
Dec-03
Apr-04
Aug-04

Dec-04
Apr-05
Aug-05
Dec-05
Apr-06
Aug-06
Dec-06
Apr-07
Japan
Mexico
Europe

Canada

Aug-07
China

Dec-07
Apr-08
Aug-08
Dec-08
Apr-09
Aug-09
Dec-09
Apr-10
Aug-10
Dec-10
US Trade (im)Balance ► China Connection

Apr-11

FX Outlook 2011-12 ► LATAM in Global Context
2010 2011 2012
EUR/USD 1.34 1.45 1.40
USD/JPY 81 80 85
USD/GBP 1.56 1.63 1.70
USD/CAD 1.00 0.96 0.94
USD/CNY 6.61 6.25 5.88
USD/MXN 12.3 12.3 12.5
USD/CLP 468 485 495
USD/PEN 2.81 2.76 2.70
USD/COP 1,908 1,850 1,900
USD/BRL 1.66 1.70 1.75

FX Reserves ► Fast & Steady Accumulation
700
Colombia
Peru
600 Chile
Argentina
500 Venezuela
Mexico
US $ billion

Brazil
400

300

200

100 Brazil accounts for over 50%
of the region’s FX Reserves
0
Sep-06
Dec-06

Jun-07
Sep-07
Dec-07

Jun-08
Sep-08
Dec-08

Jun-09
Sep-09
Dec-09

Jun-10
Sep-10
Dec-10

Jun-11
Mar-07

Mar-08

Mar-09

Mar-10

Mar-11

LATAM Currency Market ► Appreciating Bias?

FX % change vs USD (5-yr) FX % change (1-20 Sep 2011)
50% Peruvian
-0.5%
Sol (PEN)
40%

30% Colombian
-4.5%
23% Peso (COP)
20%

10% Chilean
-5.9%
Peso (CLP)
0%
MXN Mexican
-10% BRL -6.5%
PEN -15% Peso (MXN)
-20% CLP
COP Brazilian
-30% -11.3%
Real (BRL)
Sep-06

Mar-07

Sep-07

Mar-08

Sep-08

Mar-09

Sep-09

Mar-10

Sep-10

Mar-11

-12% -10% -8% -6% -4% -2% 0%


Global Risk
Repricing


US (Treasury Debt vs Mortgage) Market Rates (10-year History)
7.08
5.19
6.78
4.86

6.48
4.53

6.18
4.21

5.88
3.88

3.55 5.58

3.22 5.28

2.89 4.98

2.57 4.68
UST (10-year yield)
2.24 Mortgage (30-year rate) 4.38
4.09
1.91 4.08

Mar-02

Mar-03

Mar-04

Mar-05

Mar-06

Mar-07

Mar-08

Mar-09

Mar-10

Mar-11
Sep-01
Dec-01

Jun-02
Sep-02
Dec-02

Jun-03
Sep-03
Dec-03

Jun-04
Sep-04
Dec-04

Jun-05
Sep-05
Dec-05

Jun-06
Sep-06
Dec-06

Jun-07
Sep-07
Dec-07

Jun-08
Sep-08
Dec-08

Jun-09
Sep-09
Dec-09

Jun-10
Sep-10
Dec-10

Jun-11
1.92

“The Federal Reserve’s Acquisition of long-
term Treasury securities boosted the prices of
such securities and caused long-term
Treasury yields to be lower than they would
have been otherwise”
Ben Bernanke, July 13, 2011

European Fiscal/Debt Shock ► Market Metrics

Europe PIGS Bond Yields Europe PIIGS CDS

24 3536
Germany 23 3,400 Greece
22 3,200
Spain Portugal
20 3,000
Portugal 2,800 Ireland
18 Ireland 2,600 Spain
16 Greece 2,400 Italy
2,200
14 2,000
12 1,800
1,600
10 1,400
8 1,200
1,000
6 5.4 800
4 600
400
2
200
0 0

Nov-08

Nov-09

Nov-10
Sep-06
Dec-06

Jun-07
Sep-07
Dec-07

Jun-08
Sep-08
Dec-08

Jun-09
Sep-09
Dec-09

Jun-10
Sep-10
Dec-10

Jun-11

Sep-08

Jan-09

Jan-10
Jul-09
Sep-09

Jul-10
Sep-10

Jan-11

Jul-11
Sep-11
May-09

May-10

May-11
Mar-07

Mar-08

Mar-09

Mar-10

Mar-11

Mar-09

Mar-10

Mar-11

European Debt Crisis ► Latin America in Context

Central Government Debt Credit Default Risk Metrics

Chile
140
Mexico
120 Colombia PIIGS
% Of GDP (2011-12 e)

LATAM Brazil
LATAM
100 Peru
PIIGS
Argentina
80
Venezuela
60
Spain
40 Italy
Ireland
20
Portugal
0 Greece
Ireland
Colombia

Argentina

Italy
Brazil
Mexico
Chile

Portugal
Spain
Peru

Venezuela

Greece

500
0

1,000

1,500

2,000

2,500

3,000

3,500
Basis Points


European Debt Crisis ► Latin America in Context

Current Account Balance Government Fiscal Balance

0.0 0.0
-0.2
-0.5
(1.0) (1.0)

2011-12 Government Net Borrowing (% GDP)
( 1.2 )
2011-12 Current Account Balance (% GDP)

- 1.5 -1.5
(2.0) (2.0)
- 2 .1
- 2 .2
- 2 .5
(3.0) ( 2 .7 ) (3.0)
-2.9
- 3 .1
-3.4
(4.0) (4.0)
( 3 .9 )

(5.0) ( 4 .7 ) (5.0)

LATAM
( 5 .0 )
LATAM
(6.0) (6.0)

(7.0)
PIIGS (7.0) ( 6 .8 ) ( 6 .6 )
PIIGS
( 7 .3 )
(8.0) (8.0)

(9.0) (9.0)
( 9 .1)

(10.0) (10.0)
( 10 .0 )

Spain

Italy

Chile
Colombia

Brazil
Portugal
Ireland

Mexico

Peru
Greece
Spain

Brazil
Portugal

Italy

Peru

Chile

Ireland
Colombia

Mexico
Greece


Merci
Gracias
Obrigado
Thank You

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