General

International institutions such as the International Monetary Fund have recently raised their economic growth forecasts for Latin America in 2021. Facing the challenge of the epidemic, Latin American countries have introduced measures to stabilize the economy and protect the people's livelihood, and have achieved certain results. Countries in the region have also seized the opportunities brought about by China's accelerated economic recovery, continued to promote the expansion of Sino-Latin American trade, and injected greater impetus into regional economic growth.

The United Nations Economic Commission for Latin America and the Caribbean recently raised the economic growth rate of Latin America in 2021 from 5.2% to 5.9%. The International Monetary Fund expects the Latin American economy to grow by 5.8% this year, up 1.2 percentage points from the April forecast. Barsena, Executive Secretary of the Economic Commission for Latin America and the Caribbean, said that thanks to the expected improvement in the economies of major economies in the region, the overall economy in Latin America has recovered, but countries in the region still need to work hard to deal with structural problems.

Multi-country economic indicators are improving

The mayor of Ribeirao Preto, Brazil, recently stated that Brazil has abundant natural resources, affected by the recovery of global economic growth, strong external demand for Brazilian products, coupled with the continuous advancement of new crown vaccination, some economic indicators in Brazil are increasing. The trend is good, and social and economic activities have resumed.

In the second quarter of this year, Brazil's gross domestic product (GDP) increased by 12.4% year-on-year, the largest year-on-year increase since 1996. In the first quarter of this year, Brazil's GDP was higher than the fourth quarter of 2019 before the epidemic. The report released by the Brazilian Ministry of Economy in mid-July predicts that Brazil's economic growth rate will be 5.3% and 2.51% respectively this year and next, which is higher than the 3.5% and 2.5% predicted in May. Among the three pillar industries in Brazil-agriculture and animal husbandry, industry and service, only the service industry has not yet recovered to the level before the epidemic.

Mexico's economic recovery growth momentum is also better than expected. Mexico’s Vice Minister of Finance Yolio said that Mexico’s economic growth rate is expected to reach 6% this year, an increase of 0.7 percentage points from the previous forecast. According to recent data released by Mexico’s National Geographic and Statistics Bureau, Mexico’s actual GDP in the first half of this year increased by 6.9% year-on-year, with a year-on-year increase of 19.56% in the second quarter and a quarter-on-quarter increase of 1.5%, which is the fourth consecutive quarter of upward growth.

In addition, according to data released by the Central Bank of Chile on August 18, GDP in the second quarter of this year increased by 18.1% year-on-year. Chile’s Minister of Finance Zelda stated that these figures are “closely related to a certain degree of control of the epidemic and increased vaccination rates”. In addition, Peru’s National Bureau of Statistics estimates that Peru’s GDP will grow by 10% this year. The analysis believes that the economic growth of Latin American countries is mainly due to the increase in commodity prices in the international market and the recovery of the world's major economies.

Take multiple measures to deal with risks

The main challenges facing Brazil's economic recovery are unemployment and high inflation. In response to risks, Brazil is actively raising vaccines, striving to expand the scope of vaccination, and at the same time provide protection for the low-income population and the unemployed. The Brazilian government recently launched a new subsidy program to expand the scope of subsidies for low-income groups, and 17 million people will benefit from this. The government is also establishing a budget of 35 billion reais (1 U.S. dollar equals 5.5 reais), and an additional 18 billion reais budget, and will invest 49 billion reais for unemployment insurance this year.

Promoting the recovery of the job market is also the goal of the Chilean government. According to official data released by Chile, the country’s unemployment rate fell to 9.5% in June, down 2.7% year-on-year, and it was the first time since April 2020 that the unemployment rate fell below 10%. The Chilean government launched the "Chile Gradual Recovery Plan", which plans to invest 34 billion U.S. dollars during 2020-2022 and promote 130 investment projects. Moreno, Minister of Public Works of Chile, said that Chile has restored about 1 million jobs. The Chilean government has launched more than 20 projects to encourage and promote job creation in the private sector under the framework of the plan, with a total investment of more than US$6 billion.

Ecuador introduced tax reforms to reduce production costs for enterprises. The Ministry of Production, Foreign Trade, Investment and Fisheries of Ecuador stated that the government will abolish US$180 million in tariffs, benefiting more than 80 industries, more than 6,000 companies and 560,000 people across the country. This is Ecuador's largest tariff reform in more than 10 years. It aims to reduce the cost and expense of raw materials and capital goods, which will activate the production enthusiasm of enterprises and promote the recovery of economic activities.

Analysis believes that the Latin American economy still faces long-term risks. The Latin American region's attraction to foreign direct investment dropped sharply last year. The Economic Commission for Latin America and the Caribbean predicts that this year's investment growth rate in the entire region will be much lower than the global level. The Economic Commission for Latin America and the Caribbean stated that Latin American countries need to actively respond to long-term risks such as heavy foreign debt burdens, sluggish investment, underemployment, and environmental degradation. The process of economic recovery is still facing deep-seated problems such as inequality, poverty, and single economic structure.

Highlights of China-Latin America Trade Frequently

According to data released by the General Administration of Customs of China, in the first half of this year, the total value of imports and exports between China and Latin America was approximately US$200.3 billion, a year-on-year increase of 45.6%. ECLAC believes that the Asian region, especially China, will be the main driving force for the growth of Latin American exports in the future. At present, Latin America is China's second largest destination for foreign investment and an important partner in international production capacity cooperation. According to statistics from the Ministry of Commerce of China, from January to May this year, China's direct investment in Latin America reached 10.38 billion U.S. dollars, a year-on-year increase of 40%.

China has maintained Brazil's largest trading partner status for 12 consecutive years. According to data from the Brazilian Ministry of Economic Affairs, in the first half of this year, Brazil's total exports increased by 35.8% year-on-year, and the foreign trade surplus increased by 68.2% year-on-year, becoming the highest record since the statistics in 1989; among them, exports to China in the first half of this year increased by 37.8% year-on-year. According to data from the General Administration of Customs of China, the total import and export volume of China and Brazil in the first half of the year increased by 42.8% year-on-year. Brazilian Foreign Minister França said that developing relations with China is one of Brazil's diplomatic priorities, and Brazil hopes to further strengthen economic and trade exchanges with China.

According to data from the General Administration of Customs of China, in the first half of this year, the total bilateral trade between China and Chile was 199 billion yuan, a year-on-year increase of 38.5%. According to Chilean customs data, Chile's foreign trade in July increased by 39.9% year-on-year. Chile’s exports to China accounted for 40% of the country’s total exports that month, and exports to China exceeded US$3.3 billion. Ignacio, Director of the General Administration of Customs of Chile, said that Chile-China bilateral trade has grown rapidly under the epidemic, which further confirms China's important position as Chile's main trading partner. China has achieved economic recovery, and its strong demand has stimulated exports of Chilean mineral products. Chile's good foreign trade performance has laid an important foundation for the country's economic recovery.

In recent years, Chinese and Latin American companies have actively expanded cooperation in areas such as service trade, and the bilateral trade structure has continued to optimize. At the Yunshang International Service Trade Fair held in some provinces and cities in Brazil, China, the representatives of China and Brazil believed that the current China-Brazil service trade cooperation presents a deep, high-growth and diversified development trend. Under the framework of the China International Trade in Services Fair in 2021, special events were held in Latin America and the Caribbean. Representatives of more than 10 countries including Chile, Mexico, and Brazil introduced the trade exchanges between their countries and China, and expressed their strengthening of economic, trade and investment cooperation with China. Willingness.