According to a report from a leading Brazilian economic institution, the Latin America business climate is at its best for more than three decades.
According to newly released analysisThe Getulio Vargas Foundation, which includes ten major Latin American countries, reports that the Q3 2021 business climate is the best since Q1 2018.
This means that the Latin American business environment is now more favorable than it was prior to the global pandemic.
FGV’s analysis looks at factors such as the supply of inputs and raw materials for business, as well as commodity prices. Results are based on a measure referred to as ‘Economic Climate Indicator’ (ICE), which is calculated based on an average between present business conditions and predicted conditions, known as ‘Current Situation Indicators’ (ISA) and ‘Expectations Indicators’ (IE).
Argentina, Brazil and Chile were all analyzed. Between Q2 and Q3 of 2021, all of the countries surveyed registered an improvement in ICE, which is based on a 100-point “neutrality scale”.
Overall, the region has seen five consecutive quarters of improvement in this scale, reaching an average score 99.7 this quarter. This is the highest score recorded since the 2018 regional average reached 101.5.
Among them, Paraguay was the standout performer, registering an ICE score of 125.1 — a significant rise on the score of 100.0 it registered in the previous quarter which consolidates its status as having the best climate for business in Latin America, according to FGV.
Other strong performers for Q3 were Brazil (16.5 points), Chile (104.1), Peru (102), and Colombia (101.1).
Brazil’s 34.3 point rise compared to Q2 saw it move up two places into second position among those countries surveyed, while Peru’s 21.1 rise saw it move into fourth position, having occupied sixth last quarter.
Ecuador also saw the greatest improvement in the country’s performance since the quarter ended, with 26.2 points gaining it to 77.9. That suggests the country’s recently elected pro-business President Guillermo LassoA significant improvement has been observed in business climate in the country.
Investors are encouraged by the improvement in the business climate
FGV’s latest analysis shows that Latin America has a bright future. This is because economies across the region are continuing to recover from the chaos of the global pandemic.
Investors can take heart in the positive signs, with all the countries surveyed reporting improvements over the previous quarter and the overall business climate in Latin America now at its best since Q1 2018.
Notably, Q3 2013 was the last quarter in which the region scored higher than the current quarter. Five consecutive quarters with no decline in business climate in Latin America is the most notable improvement, with analysis starting at Q3 2011.
Many Latin American economies are expected to grow and rebound from the ructions caused by the pandemic in 2021 and others in 2022. This bodes well for future business prospects in the region.
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