Saturday, December 2, 2023

The business climate in Latin America fell to its lowest level in two years

The climate for business in Latin America fell for the third consecutive quarter and was between July and September 2022 at its lowest level in the last 2 years, according to the indicator released this Monday by the Brazilian center for economic studies Getulio Vargas Foundation (FGV). ).

According to the FGV, which consulted 150 specialists from 15 countries, the so-called Economic Climate Index (ICE) of Latin America stood at 54.7 points in the third quarter, its lowest level since the second quarter of 2020, when the crisis generated by the covid pandemic sank the indicator below 50 points.

The indicator has been gradually falling from the 101.4 points it reached in the third quarter of 2021, when the region seemed to have overcome the serious economic crisis caused by the covid pandemic.

The worsening of the business climate once again placed the indicator below pre-pandemic levels (85.9 points in the first quarter of 2020) and almost 13 units below that registered in the second quarter of this year (67.3 points).

According to the study, the drop in the indicator is mainly the result of the pessimism with which economists face the future, and not so much of the economic situation in the region.

While the Current Situation Index (ISA), which reflects the situation, fell less than 5 points, from 48.8 points in the second quarter to 44.3 points in the third, the Expectations Index (IE), which measures projections for next 6 months, he lost more than 20 points (from 87.2 to 65.5).

“The worsening of expectations sets off a warning signal because it indicates that specialists expect an economic slowdown in the coming months,” according to the FGV.

According to the study, the business climate only increased in the third quarter in 2 countries (9.9 points in Paraguay and 1.7 points in Bolivia), while it fell sharply in the others, starting with Uruguay (-27.0 points). .

Despite this sharp drop, Uruguay continues to be the country with the best business climate in the region, with 122.6 points, followed by Paraguay (101.1 points). These two economies are the only ones in which the indicator is in the area considered favorable (above 100 points).

In the unfavorable zone were Colombia, with 72.6 points after having lost 23.1 units, Ecuador (70.5), Bolivia (67.6) and Brazil (54.5), and in the most critical zone Peru (49.7), Mexico (48.7), Chile ( 36.2), Argentina (25.8) and Venezuela, which was no longer evaluated.

Despite the fact that the Colombian Situation Index advanced 15.7 integers to 135.7 points, the best in the region, the Andean country’s Expectations Index lost 51.9 points, to 21.4 integers, the worst in the region, after the arrival to power of Gustavo Petro, the first leftist president in this nation.


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